In many cases it is apparent that there is either no contract, or the terms of the contract entitling the recruitment agency to their fees or absolving employment businesses are unclear.
For a contract to be binding between the recruitment agency and the hirer, and between the employment business, its client, and agency worker the following are essential ingredients of the contract namely:
Unfortunately, in some instances difficulties have arisen in enforcing contracts because one or more of the above have not been considered.
In one instance, a recruiter anxious to impress his employer entered into a dialogue with a prospective client/hirer through social media, and introduced a candidate who was subsequently hired without any terms and conditions being agreed. Needless to say, the hirer is refusing to pay the placement fee.
In another scenario, the standard terms of business provided that there was no obligation on the part of the employment business to give notice to an agency worker to terminate the assignment, which was contradicted by a schedule which required the employment business to give a month's notice. Unfortunately, the terms and conditions with the hirer enabled it to terminate the assignment with the employment business without notice. The agency worker is claiming their month's pay from the employment business.
In a separate situation, a recruitment agency introduced a candidate, entitling it to a fee if the hirer engaged the candidate within a certain period. There was no contract of employment, contract for services or otherwise entered into between the prospective hirer and the candidate. However, the potential hirer had provided the candidate with an email address, although there was no evidence there had been any commercial activity. Unfortunately the definition of what constitutes an 'engagement' is unclear, and again there is a dispute about fee entitlement.
In another case, an employment business assigned all employment obligations to make payments of wages and pensions to an umbrella company. There is some doubt as to whether the agency worker was aware of the arrangement, although they were clearly paid on an ad hoc basis. When the umbrella company stopped paying the agency worker (even though it had received the funds to pay) the latter issued tribunal proceedings against the employment business, and also sought compensation for losses arising from the non-payment and late payment of salary, including:
There is no case law in this area, serving a warning not to become a test case.
In all of the above scenarios, the contractual documentation was inadequate, leaving recruitment agencies and employment businesses having to become involved in expensive litigation in pursuing placement fees for candidates, or alternatively leaving employment businesses to defend tribunal proceedings.
We would strongly advise recruitment agencies and employment businesses to:
Here at VWV, we have a specialist team that can assist either with the review of your terms and conditions of business or collecting sums owed to you.