UK recruiters need to take care when helping set a 'going rate' for a job

The Competition and Markets Authority (CMA)  has just imposed fines totalling over £4 million following a finding that five sports broadcast and production companies had shared sensitive information on fees for freelance workers (such as camera operators and sound technicians).

In particular, the CMA found 15 instances in which companies had shared sensitive information on freelancers' pay with each other, including on day rates and price rises. In most cases, the aim was to coordinate how much to pay to freelancers, with evidence demonstrating that one business told another that they have "no intention of getting into a bidding war" but "want to be aligned and benchmark the rates".

Continued focus on labour markets

This infringement decision shows the CMA's continued focus on competition issues in labour markets. In line with the CMA's guidance for employers on avoiding anti-competitive behaviour, businesses should:

• Be aware that salary information is sensitive and should not be shared with competitors – this is not limited to freelance payments, but includes granular information on employee salaries too.
• Hirers need to be careful when using external recruiters to establish salary "benchmarks". The receipt of salary information on competitors can expose businesses to the risk of fines if not properly aggregated and anonymised by third parties.
• Similarly staffing companies and managed service providers (MSP) and recruitment process outsourcing (RPO) companies need to take care when advising clients in the same industry what the "going rate" might be for a particular role.
• All need to provide recruitment staff with training on competition law and how it applies in the recruitment context.

Osborne Clarke comment

Many disgruntled freelancers and contractors will have seen this story (which was headline news on the BBC website), and many may be tempted to mount actions or make complaints on the back of this to the CMA, so any organisation which is involved in collaborating with competitors about pay rates, or helps hirers set those rates, should take immediate steps to make sure their house is in order: competition law fines can be very high.

Staffing companies, MSPs and RPOs which advise a range of companies and help all those companies set rates (perhaps related to attempts to keep rates down while the economic outlook is so uncertain) may be particularly at risk.

Our competition team can help you navigate competition risks in a recruitment, staffing and employment context, including by delivering compliance training sessions and reviewing existing benchmarking practices, to ensure that these comply with competition law.