The Social Mobility Foundation has been urged to ban FDM Group and Sparta Global from their prestigious Employer Index for 2022.

The request follows outcry over the firms’ inclusion in the 2021 list despite their use of ‘exit fees’ of up to £15,000 to trap young people in their jobs.

Graduate Fog’s founder Tanya de Grunwald has called that decision ‘a terrible mistake, which has allowed both firms to present themselves as social mobility champions, when in fact they are the opposite. Given what we know about these firms, I would encourage young people to run away from them, not towards them. Seeing them bragging about their win should make us all feel queasy.’

The SMF’s employer index is designed to identify the UK’s 75 best firms for young people for disadvantaged young people to work for, and effectively gives the listed companies a 12-month licence to boast about being a champion of social mobility. Submissions for this year opened last week, and winners will be announced in November.

A company’s appearance on the list can be used to give prospective employees confidence that their organisation has been independently certified as a good place to start their career.

This includes many ‘first jobbers’ such as graduates, plus armed forces veterans, or mothers getting back into the workforce. Inclusion on the SMF employer index is a badge of honour and a mark of trust.

There is also a commercial value for winners. Appearing on the index can also help firms to attract and secure new clients who are keen to work with socially responsible suppliers.

So, how did these companies worm their way on to the 2021 list? Good question; it is difficult to square FDM and Sparta’s inclusion on the index with the reality of how they operate. FDM charges up to £15,000 if graduates leave in less than two years; Sparta charges up to £8,000 (having charged £22,000 at one point). Graduate Fog regularly hears from highly distressed graduates who are desperate to leave these firms’ schemes, but are unable to because they cannot find the funds to buy their way out.

Graduate Fog reported that graduates were devastated when it was announced in November 2021 that FDM and Sparta were in positions 32 and 57 on the SMF’s 2021 employer index:

This was despite extensive reporting at the time about the damaging impact of exit fees, and the ways in which those from disadvantaged and under-represented groups are particularly vulnerable. In addition, SMF CEO Sarah Atkinson had herself expressed concern about the practice back in June 2021, telling Graduate Fog:

“We are deeply concerned to hear that firms who pride themselves on being inclusive employers are using practices likely to have a disproportionate impact on disadvantaged young people starting their early careers. First generation graduates don’t always have the knowledge and confidence to recognise when an opportunity may not be what it seems, and employers need to act responsibly.”

Despite Sarah’s concerns, it is understood that the SMF’s board of trustees felt it would be unfair to remove FDM and Sparta based solely on the reports, as no specific questions about exit fees has been asked of employers when submitting their application for the 2021 list.

However, when we questioned the SMF about this in November 2021, the spokesperson appeared to imply that they would consider tightening the rules for the 2022 index:

“Employers ranking in the Index have shown their commitment to social mobility and their willingness to improve — the role of the Index is to highlight both good and bad practice, and to encourage progress in key areas. We will look at how the practice of charging exit fees should be incorporated into the Index benchmark in 2022.”

So, the big question is: Has the SMF made changes to its submissions process for 2022, to ensure that employers that charge large exit fees will not be able to appear on the index?

Graduate Fog’s founder Tanya de Grunwald says that after the disaster of last year, she hopes the SMF will be keen to clarify their position on exit fees relating to their 2022 employer index. She said:

“We all love the Social Mobility Foundation, which does fantastic work in supporting young people from disadvantaged backgrounds and educating employers about how to be more inclusive. CEO Sarah Atkinson has been a great supporter of Graduate Fog, and the Good + Fair Employers Club, which I run in parallel with it.

“However, it is no secret that I think the SMF board of trustees’ decision to allow FDM and Sparta to appear in the 2021 employer index was a terrible mistake.

“Clearly it would have been awkward to dump them from the list just before it was announced. But the alternative — awarding a bad employer, thereby misleading young job seekers into thinking these are two ‘good’ employers — should have been unthinkable.

“It has been galling to watch these two firms bragging about being social mobility champions since November, when the truth is that they are quite the opposite.

“In the last nine months, Graduate Fog’s reporting has highlighted the gross injustice of the practice of charging large exit fees, and it is clear that those from disadvantaged backgrounds are among the most vulnerable.

“In my view, no big firm that charges large exit fees should appear on the SMF’s employer index ever again. Why let FDM, Sparta or any other such firm taint their otherwise-excellent list? 

“The SMF was caught out badly by this issue last year, and has been playing catch-up ever since. It is now time for the organisation to get ahead, and state a clear position on this, in relation to their 2022 index.

“I would also advise the SMF to make plans to stay ahead of similar issues in future. The youth jobs landscape changes fast, and requirements for the employer index will need to keep pace in order to make sure the right firms are recognised, and it is not possible for bad firms to ‘game the system’.

“In order to help with this, I and other campaigners in this space would be happy to work more closely with the SMF in future to alert them to new problems appearing on the horizon.”

Graduate Fog’s email to the SMF is here:

To: Social Mobility Foundation
From: Graduate Fog
Date: Friday 4 March 2022
Subject: Press comment: Exit fees and your 2022 Employer Index

I see that the Social Mobility Index for 2022 has just opened for submissions. I’d like to ask a few questions relating to exit fees, for a story on Graduate Fog next week:

1. Does this year’s submissions process require employers to answer questions relating to their policy of charging ‘exit fees’ to workers who leave after less than a certain period of time?
2. If so, how is the question worded?
3. Will the answers provided by employers be audited?
4. In June 2021, the Social Mobility Foundation’s CEO expressed ‘deep concern’ about the practice of exit fees, in particular that those from disadvantaged backgrounds are likely to be disproportionately impacted. Yet, in November, the names of two firms that charge large exit fees – FDM Group and Sparta Global – appeared on the Social Mobility Foundation Employer Index for 2021, a decision which shocked many young people who have been affected by these contracts. Furthermore, this decision effectively gave these two firms a 12-month licence to present themselves as trusted employers of young people from disadvantaged backgrounds, and champions of diversity and social mobility. If one of the purposes of the Index is to help young people from disadvantaged backgrounds to identify the best employers for them to work for, then it is likely that the SMF’s endorsement of these firms gave young people confidence to engage with these firms. It is therefore also likely that some young people will have gone on to sign restrictive employment contracts with these firms that they may otherwise have asked more questions about – and possibly not signed at all – had the SMF not endorsed these companies. It is also likely that some of these young people are currently trapped at these firms and unable to leave without paying up to £15,000. With hindsight – and with reference to the number of client firms who are now distancing themselves from FDM and Sparta as part of the Graduate Fog campaign to Stop Exit Fees Now – does the SMF now regret its decision to include these firms in last year’s Employer Index? Does the SMF take any responsibility for any distress currently being experienced by young people who signed restrictive contracts with FDM and Sparta at least partly because the SMF’s endorsement gave them confidence that these were ‘nice’ employers who would treat them well?
5. If the SMF does not regret this decision, please can you explain why you still feel it was the correct decision?
6. What other work has the SMF done with FDM Group and Sparta Global in 2021 and 2022?
7. Will any employers be banned from submitting applications for the SMF Employability Index in 2022?
You can see Sparta Global boasting about their 2021 win here and here and here (there are many more examples).
You can see FDM Group boasting about their 2021 win here and here. Again there are many more examples).

With many thanks,

Tanya de Grunwald
CEO and Founder, Graduate Fog

We will let you know when we receive a reply from the SMF…

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