‘Exit fees’ firm under fire over graduate conference appearance

FDM GROUP IS CHARGING GRADUATES UP TO £15,000 IF THEY QUIT THEIR SCHEME IN LESS THAN TWO YEARS – PAYABLE WITHIN 30 DAYS. IF THE LAW CAN’T STOP THEM, INDUSTRY MUST, SAYS TANYA DE GRUNWALD

Questions have been raised about a planned appearance at next week’s Institute of Student Employers (ISE) conference by a representative of IT outsourcing firm FDM Group, given the company’s controversial use of exit fees.

Critics of exit fees – where graduates are told they’ll owe their employer thousands of pounds if they quit in less than two years – say the practice is unethical, unfair and may even be unlawful. We understand that FDM graduates are required to pay up to £15,000 if they leave in less than two years, which the firm has insisted is payable within 30 days of their departure. FDM – whose market value is thought to be £1bn – claims the fees are to cover the cost of training each graduate.

Reports about exit fees have appeared in the Guardian and the Financial Times. The campaigning lawyer Jolyon Maugham QC has called exit fees “indentured labour” and “tied servitude”, and the office of the Independent Anti-Slavery Commissioner is watching the practice with interest. Lord Field has written to the business secretary to request a public inquiry into FDM, a firm he says is “trapping vulnerable workers.”

Paradoxically, within the student recruitment world, FDM appears to have acquired a reputation as a leading graduate employer, winning awards for excellence, and praise from former Home Secretary, Amber Rudd. FDM is a high-profile member of the ISE, where a senior representative sits on the organisation’s advisory board:

And now, a representative from FDM — not a household name, but whose clients include HSBC, Barclays, BP and the Department for Education — is scheduled to appear at the ISE’s annual conference on Wednesday 30 June, in a session titled: ‘Finding your Future Tech Talent: Planning for New Campus Season,’ apparently invited to share their methods with other graduate employers. Here is the agenda:

The ISE conference runs for three days from 29 June to 1 July. The headline sponsor is Group GTI, owner of TARGETJobs.

Tanya de Grunwald, founder of Graduate Fog, and author of How to Get a Graduate Job in a Pandemic, says:

“In my view, a respected organisation such as the ISE should not be promoting, condoning or endorsing this firm, and certainly not helping them to inspire other employers to copy their methods. Our industry needs to stop turning a blind eye to what is really going on here.”

De Grunwald wrote to the ISE on Friday, to raise the issue:

To: Institute of Student Employers
From: Graduate Fog
Date: Friday 18 June 2021
Subject: Why are FDM speaking at the ISE conference?

I have just seen the agenda for the ISE Student Recruitment Conference 2021. Although much of it looks excellent, I am concerned that a representative from FDM is appearing as a panellist at the session: ‘Finding your Future Tech Talent: Planning for New Campus Season’, given the firm’s controversial use of ‘exit fees’.

In my view, a respected organisation such as the ISE should not be promoting, condoning or endorsing FDM, and it would be dangerous and irresponsible to give them a platform that allows them to inspire other graduate employers to copy their methods.

As the ISE is surely aware (following press coverage in the Guardian and the FT), exit fees clauses state that graduates are expected to pay a large sum of money to their employer (in FDM’s case, we understand this to be £16,300) if they leave their scheme in less than two years. They are told that the sum is due in full, within 30 days of their departure.

The fees are supposedly to cover the cost of the graduates’ training — however, questions have been raised about how such a high figure has been reached, given the apparently disappointing standard of the training received.

Most chillingly, the prospect of paying these fees has the effect of locking graduates into employment they would otherwise leave. (Like employees at any stage in their career, graduates may wish to quit for any number of reasons, including personal circumstances, disappointment with the reality of the work, being offered a better role elsewhere, or a change of heart about the industry they have chosen.) As one former FDM employee told the Guardian:

“I wasn’t happy in the job but the problem with the contract is there is so much room for manipulation and coercion. The manager knows that you are stuck.”

The implications for social mobility and diversity are clear. Graduates with the financial means to buy their way out can leave, whereas those without must stay.

Graduates who do leave can expect to be chased for the fees by lawyers working on behalf of their former employer. Again, those with the funds to seek legal advice are at an advantage over those without.

Since I started writing about exit fees in 2018 on my website Graduate Fog, I have heard from nearly 100 graduates — including those who are stuck, and those who have left — who are in a terrible state thanks to the stress and anxiety caused by feeling trapped in their role, or from concerns about impending legal action. Others have taken out high-interest loans to pay the huge sums they were told was due, and are now in a dire financial situation.

Given the number of employers who have been operating like this for several years and the scale of their annual intakes, it is thought that the number of graduates impacted by exit fees runs into the thousands.

Although several highly respected lawyers — including Jolyon Maugham QC and Simon Cheetham QC — have said that exit fees are certainly open to challenge in court, the legal status of exit fees will remain unclear until a test case goes before a judge. Unfortunately, this may not be any time soon, as it appears that firms charging exit fees are settling claims out of court.

In the meantime, I believe that what is required is true leadership, by those of us in a position to effect change within our industry, and shut down this pernicious practice before it spreads to other unscrupulous graduate employers.

Given the ISE’s excellent reputation built over decades, and your stated aim to be “the UK’s leading independent voice for student employers”, I am asking the following:

• Will you replace the FDM representative on the panel at the ISE’s 2021 conference?
• Will you remove the FDM representative who currently sits on the ISE advisory board?
• Will you consider relieving employers that use exit fees of their ISE membership, and refunding them any fees they have paid? I would be happy to provide you with a list of the companies that are known to use this model.
• If not, how do you justify keeping these people in place at your conference, on your board, and among your membership?

I look forward to hearing from you.

Regards,

Tanya de Grunwald

We’d love to be able to post the ISE’s reply – but there isn’t one. The organisation missed the deadline to respond to our email by noon on Tuesday. We also approached FDM Group for comment but – likewise – they have failed to reply. De Grunwald said:

“Although I’m disappointed by the ISE’s failure to show leadership on this matter, I’m not entirely surprised. Stating your values is easy – but sticking to them can be hard, especially when money is involved and uncomfortable conversations need to be had.

“In my opinion, employers who use exit fees should hang their heads in shame. This practice has no place in what is considered the reputable end of the UK’s youth jobs market.

“These firms have been hiding in plain sight for too long: speaking at events, and sitting on panels and boards alongside organisations that really care about young people, and who would never dream of recruiting their own graduates under these terms. We need to call out firms like FDM for what they are: a stain on the reputation of the UK’s student recruitment world. Standards matter.”

Other firms that have been criticised for their use of exit fees include IT outsourcing firms Sparta Global, Ten10, QA Consulting, Kubrick Group, Geeks Limited and Mitec (IT Works Recruitment). Frontline – the government-backed graduate programme for social care – also charges exit fees to those who quit the scheme in less than two years. They have argued that Frontline graduates receive a “university accredited social work qualification”, but the “harrowing” experience described by the scheme’s participants continues to trouble critics.

* GRADUATES! BEEN CAUGHT OUT BY EXIT FEES?
We are collecting stories from those who have been impacted by the scandal of exit fees. Are you currently trapped on a scheme you want to leave – but can’t afford to buy your way out of? Or have you quit, and been chased for the money? If you paid up, did you have to resort to taking out a high-interest loan? And, whatever your situation, please tell us how exit fees have impacted your mental health. Of course, all emails will be treated in complete confidence. Contact us here.