Employment agency agreements – what are they?
An employment agency agreement is the document that sets out the contractual terms between a recruitment agency and an employer, so that the recruitment agency can find a suitable worker for the employer. It enables any employer to hire an employee or worker through a recruitment agency. The way it usually works is that the employer enters into an agency agreement with a recruitment agency , so that that recruitment agency can find a person for the employer to employ. The agreement gives the recruitment agency permission to put workers forward to the employer. It is a straightforward recruitment agency format document that does not have too much detail in it and is primarily to enable someone to recruit someone through the recruitment agency.
What does an effective employment agency agreement contain?
An employment agency agreement is a contract between an employment agency or recruiter and an employer. It establishes the rules and expectations for the relationship between the employer and recruiter, and also serves as a safeguard against litigation. An employment agency agreement template will include clauses for job placement, fee structures, termination of contract, and a confidentiality agreement.
Job Placement
The employment agency agreement template establishes the process for job placement for the recruitment of prospective employees. It will include the company name and contact information, the employment agency contact information, the duration of the contract and how clients are to be introduced. For example, an employer could state that any employees they hire through the recruitment agency are eligible to receive a signing bonus. Or the employer can state that the job recruits might be eligible for full-time positions. If a recruiter uses a network of freelance talent, this should be clearly stated in the agreement. There is a clause for payments or refunds depending on the life cycle of the employee. For instance, an employer could stipulate that if the new hire is terminated within the first three months of employment, the placement agency should refund the fee.
Fee Structures
After the introduction of candidates, the employment agency expects to receive a fee. The employment agency agreement template stipulates the payment schedule and whether the fees are fixed or contingent on a successful placement. For instance, agencies or recruiters may charge employers a percentage of the employee’s first-year salary or a flat rate (usually a percentage of the employee’s first year’s earnings). The employment agency agreement template also covers how and when an employer will be expected to pay the agency. Most employment agencies provide post-employment services. After the new hire starts earning a salary, the agency will usually send an invoice to cover the fees owed. Since it usually takes a few weeks to shave off of the probationary period, employers will receive a refund, if necessary.
Termination of contract
The clause for the termination of contract provides an escape hatch to both parties just in case the terms of the contract are not met. It will outline the reasons for which either party can terminate the contract. For instance, if the employer did not make an immediate payment after the placement was made, the employment agency could terminate the contract and no longer introduce employees to the employer until the fee was settled. If the employer did not give a new hire a fair chance to prove their competence, the employment agency can terminate the contract. A neutral contract termination clause protects both parties.
Confidentiality Agreement
The agreement may be confidential. For example, when introduced to a new hire the recruitment agency may not want their clients to be aware that they have hired an employment agency against who they are trying to downsize. Or the new hire may not want their previous employer to know that they are seeking new employment. The employer and the employment agency may also not want anyone else to know that they are working together. For instance, if the employment agency has introduced the employer to a high-profile candidate, the employer may not want their competitors to know about it. So the employment agency contract needs to contain clauses regarding the confidentiality of the document. All of these terms and conditions will be included in an employment agency agreement template.
Why is it beneficial to use an employment agency agreement template?
One of the greatest benefits of using an employment agency agreement template is that it sets a standard for your business. It ensures your agency’s responsibilities, fees, and the services provided aren’t just uniform across the board, but also meet the expectation of not only employees but clients too. Many business owners get complacent, and think "oh, we’re getting by just fine with an outdated practice, and [Insert Excuse]", without realizing that what they are doing can easily come back to haunt them. Having templates give you the opportunity to modify your business practices and grow past older methods, and adapting them is as easy as re-editing their existing employment agency agreement template. Next, it can save precious time. As we mentioned before, but didn’t emphasize, re-editing an existing employment agency agreement template is a whole lot easier than developing something completely new. Sometimes in business, you can get so busy that the last thing you need is to have to, all of a sudden, burn additional time creating something new. And the most important reason of all: legal compliance. Laws and regulations are constantly in flux. If your agency doesn’t stay on top of your practices, it could result in a costly legal issue. By having an employment agency agreement template, you can always ensure you’re correctly adhering to all relevant labor laws within your jurisdiction.
How to make changes to your employment agency agreement template?
While our employment agency agreement templates will make all the important provisions that you need and help you avoid any nasty surprises, you still may need to customize a template agreement for your specific business requirements.
You may want to make adjustments to reflect the specific industry you’re in or to ensure that it’s suitable for a particular role or hierarchy. For example, you might want a higher minimum salary for a senior sales executive than for sales administrator. Depending on the nature of your business, you may need a provision with access rights so that an agent can monitor your working conditions for health and safety reasons.
You can use a template to create a parent/subcontract relationship if you want to use two agreements to help you comply with the Agency Workers Regulations.
Depending on your industry, you may also want to build in a penalty for damage to your equipment by a contractor or a new hire probationary period for permanent staff sourced by an agency.
Just as you would with the template, don’t forget to run any customized drafts through a lawyer for review before sending them out.
What are the most common employment agency agreement mistakes?
The most common mistakes with Employment Agency Agreements are:
Penalty Rates
Many Employment Agency Agreements are based on the assumption that an employee may be paid penalty rates (over-award rates) after hours. Many award systems provide higher pay rates for employees who work nights or Saturdays and Sundays.
If your particular industry does not have penalty rates, then don’t expect the Employment Agency to charge more ‘commitment fees’ because you may ‘sometimes’ need to pay penalty rates. It should be made clear that payment of these penalties is very unlikely.
Overtime
When you enter into an engagement with an Employment Agency it is also important to bear in mind that the overtime rates for the employee may be different from those of your company. For example, if a person works 10 hours on a Friday for your company they will be paid Saturday penalty rates. But if they are employed by your agency they may only be paid Friday penalty rates.
So you should ensure that the proposed agreement provides for overtime to be paid at the same penalty rates as provided for in your company’s relevant modern award . Otherwise you may find you are getting charged unnecessary extra costs for overtime worked.
Break Clauses
Sometimes an agency wants to be sure that they can terminate their agreement without giving notice or paying a fee. They provide a break clause. Whilst there may be short-term commercial reasons for this, such as your company may not require the agency’s services beyond this point, or your company may want to end the contract because of poor performance, a break clause can be very perilous.
With an Employment Agency Agreement with a break clause you can lose your staff at any time even if they are great staff. Think of the costs to the business. You can’t just hire someone else, or do a temp hire – because the agency has the exclusive right to provide the employee to you. They can just pull the staff out from under you. A break clause usually means a termination clause and should be avoided. Always seek legal advice before entering into an Employment Agency Agreement with a break clause.
What are the legal aspects of employment agency agreements?
Navigating the legal landscape is one of the most vital components of employing the right legal documents. Every country has its own set of rules and regulations regarding employment agency agreements. To begin with, whatever the type of work in question, it is imperative that the agreement clearly defines the scope of services to be provided. In most countries, this should be clearly included in the agency’s registration and regulatory information. The responsibility for ensuring this lies with the end-user, or client, company. They need to ensure that the agency they’re employing has the regulatory information and is truly able to complete the work they’re being hired for. Sometimes there are legal obligations on the client company or employer to ensure that agency workers are treated the same as employees. Alternatively, if an individual is seconded to another business, additional compliance may be required to ensure that all taxes and pension contributions are correctly managed. Shifting from an employer to a worker or vice versa is a crucial part of the early stages of a new arrangement. Even on a seemingly straightforward contract, there may be local laws that require a contract between the two organisations to be translated into a local language or comply with a local regulatory authority. This is not only true for the agreement but for any annex or other details within the contract.
How should I review or update my employment agency agreement?
When it comes to employment agency agreement templates, you should not let it gather dust indefinitely, even if you have one which you believe is working well. It will almost certainly need updating after a certain period of time and it makes sense to review if there are more recent changes in the law which might be relevant when you use your template.
Keeping abreast of why changes could be necessary is one way of making sure that your template is relevant each time you deploy it. There have been several changes to the law over the last few years that affect employment agency agreements in the UK. Some have been introduced in response to EU legislation and others as a result of changes to UK law alone. Either way, it is sensible to ensure that you are using a template which reflects the most up-to-date legal position when you enter into a relationship with a new employment agency: as mentioned above , many employment agencies will implement a blanket process of asking for a copy of your template agreement when they enter into an arrangement with a new client.
When you update your template agreement, you should consider whether to make a version for specific contracts. If you find yourself deploying an agreement of the same kind on a regular basis – for example, where you enter into a lot of supply contracts with a particular employment agency – then it may be simplest to prepare a version of the template which reflects the terms you use with this employment agency and to amend the remaining versions for other contracts. If possible, you could also include the reasons for making any changes (if they are applicable to some of your templates but not others) so that anyone who is familiarising themselves with the various agreement templates you hold can see why you are using the version you are and whether it is worth revisiting other templates and amending them to reflect the same reasoning.
No Responses