Recruitment Contracts: A Brief Risk Management Guide

Recruitment Contracts Risk Guide header

The contract terms agreed between your recruitment agency and your client’s business define the services provided. However, these also determine the responsibilities and risks that each party will accept. Understanding these contracts and their implications is vital to your risk management.

Your Contract Terms (Terms of Business)

A recruitment agency should look to use their own Terms of Business as a preference, which shall ensure that the liabilities of each party are clear and fit the services provided. There are also a number of associations for recruitment agencies, who recommend their own model Terms of Business such as the REC, or ARC / Lawspeed and recruitment agencies may choose to adopt their Terms of Business. However, the important point is that Terms of Business contracts should be reviewed by a legal advisor who can provide professional advice to comply with the regulations that will apply to the agency’s business.

Your Client’s Contract Terms (“Non-Standard Contracts”)

It will not always be possible to supply recruitment services to the hirer under an agency’s own Terms of Business, in which case the hirer will issue their contract terms for the agency to agree. Whenever using non-standard contracts, it is imperative that you are clear on what you are agreeing to and what liability you are adopting when you sign on the dotted line.

In terms of your responsibilities, non-standard contracts may – for example – include a requirement for you to provide training or equipment, so these must be costed into your agreement; they may mean financial penalties or other repercussions in the event of a temporary worker failing to do their job correctly or adequately; or, importantly, they may have severe implications on what you are liable for and what your insurance will or will not cover.

If you are planning on using non-standard contracts, as well as fully understanding what the implications are it is important that your insurer is also given the opportunity to understand your liabilities.  This is so they can ensure you are covered and inform you if there is any disparity between the liabilities placed on you by your contracts and the cover provided to you by your insurance.

RecruiterCover offers a free contract review service to our clients. If you are unsure about the exposure your contracts are causing, we can review them in line with your RecruiterCover Commercial Insurance policy and let you know if there are any holes that need addressing on the insurance side, or if you should renegotiate the contract to ensure you are not over-exposed. Get in touch with us today to discuss your recruitment insurance needs!