‘OVER 100 OF US ARE HERE – AND WE’RE NOT FREE TO LEAVE’

The graduate who started a petition against ‘exit fees’ that has attracted more than 6,000 signatures is currently ‘trapped’ on a placement at HSBC that he is desperate to leave, Graduate Fog can reveal.

He told us: ‘Over 100 of us are here – and we’re not free to leave unless we pay up to £15,000. Our employer is FDM Group, but we are working on HSBC projects, on HSBC premises around the country. HSBC staff know that we are trapped, but they don’t seem to care.’ He and others have complained to both HSBC and FDM about the nature of the work they have been given but their requests have been ignored, he says.

As a result, ‘We are left stranded in a role that both parties are unwilling to let us leave, with minimal work and almost no opportunities to learn new skills in the role, or even build out a network. To top it all off, my contract says I can’t leave unless I pay £15,000, so I can’t quit. Effectively, there is no way out.’

Tanya de Grunwald, the founder of Graduate Fog, says the revelations are a ‘game changer’ for her campaign to ‘Stop Exit Fees By Xmas’, as they turn the public’s attention to the clients of the firms that charge these huge exit fees. Some of the UK’s best-known companies, biggest brands and even government departments ‘now have ‘serious questions to answer about their role in all this misery,’ she says.

PROFITING FROM MISERY? These are just some of the organisations known to have used the services of FDM or other firms that charge huge exit fees to graduates who wish to leave in less than two years

In the petition, the graduate – who is in his early 20s – wrote:

I started a job with one of the UK’s biggest banks. It’s my first full time job. And if I try to leave or change job within 2 years, they’ll charge me £15,000, payable in 30 days. My salary is £25,000 – I’m trapped.

I am one of around 4,000 UK graduates stuck in a job I’m not free to leave. If I quit, I’ll have to pay £15,000 within 30 days. If don’t pay, I’m told I’ll be chased by lawyers threatening bankruptcy.

I’m working at the head office of a massive UK bank – but I’m not actually employed by them, I’m hired as an IT consultant. My employer is FDM Group, one of the UK’s biggest IT outsourcing firms. They hire 1,000 graduates every year on contracts that include a so-called ‘exit fees’ clause. This allows them to claim huge sums if we quit in less than two years.

FDM claim this covers our training costs, but my training was really basic, all online, and most of it can be accessed for free on the internet.

DON’T BELIEVE THESE NUMBERS? Click this table to view the contracts and invoices being sent to graduates who work for these companies

FDM Group hires 1,000 graduates every year (all on exit fees contracts) and the company is thought to be worth £1bn.

The petition is accompanied by a letter to Michael Gove, Secretary of State for Levelling Up, Housing and Communities, demanding an investigation into FDM and the other firms known to charge large ‘exit fees’ to graduates who wish to leave in less than two years. The letter to Mr Gove says:

Dear Michael Gove, Secretary of State for Levelling Up, Housing and Communities,

Please investigate FDM Group and the UK’s other big IT outsourcing firms currently charging huge fees to graduates who quit their scheme in less than two years – including Sparta Global, QA, Kubrick Group, Revolent, Ten10 and Geeks Limited.

They claim this is to cover training costs, but they dispute the standard of training that was provided – and many signed the contract when they felt unable to ask questions, as they feared the job offer might be retracted if they seemed like a troublemaker.
This practice of charging large ‘exit fees’ has a disproportionate impact on people from disadvantaged backgrounds. Therefore, it stands in direct opposition to this government’s promises to ‘level up’ the UK.

De Grunwald – whose campaign to Stop Exit Fees By Xmas has gathered support from Severn Trent, The Big Issue and Good Law Project, said:

‘This announcement is a game-changer – because it moves the attention away from FDM and the other firms charging exit fees and on to their clients – some of the UK’s most famous companies, biggest brands, and even government departments.

‘Until recently, these firms could turn a blind eye to what is happening right under their noses — often on their own premises. They could claim they were unaware that the graduate contractors ‘bought in’ (yuck) to work on tech projects were not free to leave their jobs without paying huge sums.

‘But, since Graduate Fog published the evidence in November, this issue has become impossible to ignore. Now, pressure is growing for the firms listed as clients of these companies to dump them. If they don’t, they are complicit in causing misery to these young workers, by effectively trapping them in jobs they can’t afford to leave.

‘HSBC have serious questions to answer about what has been going on with their graduate contractors. If they knew that they were ‘buying in graduates’ who were not free to leave without paying £15,000, I think that is a pretty shameful admission.’

FOLLOW THE MONEY: We want the clients of FDM and the other other exit fees firms to stop working with them. Will they step up and drop them?

And there are further revelations — as we can today reveal that HSBC was warned about FDM’s conduct as back as far as December 2019.
How do we know? Because we told them.

WHY ARE GRADUATES SIGNING THESE CONTRACTS? Because they’re desperate for job! Click here to read another FDM graduate’s story

In December 2019, de Grunwald wrote to the HSBC press office, asking for the bank’s support in the fight to end exit fees (yes, she has been banging on about this for YEARS). She wrote:

To: HSBC Press Office
From: Tanya de Grunwald, Graduate Fog
Date: Thu, 5 Dec 2019
Subject: FDM Group / exit fees

Thank you for your time on the phone just now.

As I explained, I’d like to flag some poor practice from one of your suppliers – the IT outsourcing firm FDM Group. It seems they are effectively locking trainees into their graduate programme by insisting that they must pay £16,5000 within 30 days if they leave in under 2 years.

They claim that this is to compensate them for the investment they have made in the trainees’ training, but we have investigated and this is of such poor quality that it seems impossible to believe.

The graduates are then sent out to clients like HSBC, to work on site. We are unclear as to whether you are aware of the terms of their employment with FDM – we assume and hope that you are not.

This article and this article will help to catch you up.

As I explained, we usually name-and-shame big employers who are doing things that they shouldn’t be! However, on this occasion it would be much more valuable for us if FDM’s clients (including HSBC) would either stop working with FDM, or use your influence to get them to change their policy on charging exit fees.

As well as running Graduate Fog, I also run the Graduate Fog Employers Club (soon to be re-named the Good + Fair Employers Club) and all our members (including Google, EY, KPMG and BT) have said they would never dream of inflicting such harsh penalties for graduates on their own graduate schemes. I suspect HSBC’s own early careers team will be equally horrified by the practice, and HSBC will be keen to distance yourselves from it.

I’d be grateful if you could pass this on to the best person your end to investigate and come back to me.

With many thanks,

Tanya

Six week later, HSBC’s senior press officer sent this reply:

To: Tanya de Grunwald, Graduate Fog
From: HSBC Press Office
Date: Wed, 15 Jan 2020

Dear Tanya

Thanks for the email and the conversation before Christmas. We don’t comment on specific suppliers but a spokesperson quote regarding our expectations of suppliers is below:

“HSBC expects our suppliers to operate responsibly, in line with our values and in line with our Supplier Code of Conduct. As part of our ongoing supplier management, we review suppliers’ practices against this code on a regular basis.”

Ends

Our Supplier code of conduct can be found here: https://www.hsbc.com/our-approach/risk-and-responsibility/working-with-suppliers

…which was rather underwhelming. The email was unsigned, and left several questions unanswered. So, de Grunwald wrote back immediately:

To: HSBC Press Office
From: Tanya de Grunwald, Graduate Fog
Date: Wednesday 15 January 2020

Thank you, this is very helpful and I am pleased to hear that suppliers’ practices are inspected against your code on a regular basis.

In your suppliers code of conduct, I note the following:
Labour
1. Suppliers must prohibit the use of all types of slavery and forced and bonded labour and give workers, whether local or migrant, the right and the ability to leave employment when they choose

Please can you clarify whether HSBC has a more detailed definition of what you mean by ‘bonded labour’ and whether the sort of practice I have outlined – the threat of ‘exit fees’ of thousands of pounds being payable by graduates – would satisfy that definition? And does HSBC feel that graduates working under those circumstances would ‘have the right and the ability to leave employment when they choose’?

I understand that any answer you provide to these questions would not be specific to FDM or any other supplier, but merely a general statement of HSBC’s position on the labour practices of its suppliers in general.

With many thanks again,

Tanya

No reply was ever received. Then, in March 2021, de Grunwald had another opportunity to raise the issue with HSBC, following a discussion with the bank’s head of graduate recruitment about whether HSBC would like to join the Good + Fair Employers Club (Spoiler: they didn’t!). In part of her email — de Grunwald wrote:

To: HSBC
From: Graduate Fog
Date: 22 March
Subject: Heads up: Possible bad press for HSBC?

Emailing you last week has reminded me that if you were to join the G+F Employers Club I was planning to have a conversation with you about HSBC’s use of a supplier called FDM, which I believe use exploitative practices, and this risks HSBC’s reputation as a good employer of young people.

See below correspondence between me and your colleague XXX in the HSBC press department, from late 2019 / early 2020.

You’ll see that FDM use an ‘exit fees’ model, whereby the graduates they take on, train up and send out to clients like HSBC (charged to you at a hefty day rate) are told they will have to pay up to £16,000 if they leave the scheme in less than 2 years, payable within 30 days (!!). FDM claim this is to repay their investment in training these grads, but this seems to be a vast sum for what amounts to what we understand to be pretty poor quality training.

These graduates are deployed to big clients like HSBC, but I strongly suspect that FDM do not make you aware of the harsh terms under which these grads are employed by FDM. Effectively, it seems likely that in recent years you have had grads working within parts of HBSC (albeit employed by FDM) who are/were not free to leave their employment without incurring a crippling bill. This is ‘bonded’ labour and is of interest to the Independent Anti-Slavery Commissioner.

I never heard back from XXX in response to my last email to him, but I got the sense that he understood how serious this was, and I hope that HSBC may have stopped using FDM in that time. This is a friendly heads-up that you might want to check in with him, if this is news to you. The cases I mention in my correspondence with XXX are coming to court this spring, so I would expect increased scrutiny of firms like FDM, particularly if the judge confirms that this practice is illegal. There are other firms like FDM – including Ten10 and Sparta – who also use exit fees, and have big clients. However, as these firms are not household names, I would expect journalists to turn their attention to the clients of these firms, including HSBC, in which case you might want to be ready for questions about how much you knew about all this, and when.

Sorry to be the bearer of bad news when no doubt you are busy with other things! As stated in the correspondence with XXX, it remains my hope that HSBC will dump (or has already dumped) FDM and be vocal about that fact. That would send a strong message that this is an unacceptable practice that has no place in the UK graduate job market.

Thanks for reading,

Tanya de Grunwald

The recipient is a respected and well-liked member of the corporate ‘early careers’ community, so it seems unlikely that she would have ignored this email. It is more likely that she tried to escalate it, but was advised not to reply, by someone higher up at HSBC (we understand that links between FDM and HSBC go right to the top). Either way, de Grunwald never received a response to this email, her second attempt to flag problems with FDM to HSBC.

Her third attempt was this week. De Grunwald wrote to HSBC on Monday to inform the bank that the author of the petition says he is currently working on HSBC’s premises and that 100 others are in the same position. We expected them to express concern for the graduates involved and an urgency to investigate, but two days later we have still not heard a word.

Today’s revelations follow outrage after a controversial decision by the Social Mobility Foundation (SMF) to include FDM Group in their 2021 Employer Index, a list that is supposed to showcase the UK’s best 75 companies for young people from poorer backgrounds to work for.

Furious graduates have questioned whether the SMF’s methodology is fit for purpose, if firms like FDM (and Sparta Global) are being rewarded as champions of social mobility. In fact, those from poorer backgrounds are the most vulnerable. They are the most likely to be desperate for a job, the least likely to feel able to challenge their contract, and the most likely to be dazzled by the calibre of the firms’ clients. They are also the least likely to be able to buy their way out of the programme if they later decide they want to leave, as they have no way to access the sort of sums that their employer claims they owe.

We’ll leave you with this LinkedIn post from FDM, published last week, enjoying the kudos of appearing in the 2021 Employer Index. As you read it, spare a thought for the 100 FDM graduates currently ‘trapped’ at HSBC, because they can’t find the £15,000 they need to buy their way out…