Recruitment agency terms and conditions – common problems

Kate Cottrell, from employment status experts Bauer & Cottrell, takes a look at the complex subject of agency terms and conditions.

Some common issues Kate and her team have come across include:

Common Problems with T&C’s

• Many contractors (and agencies) do not actually read the contract or fail to read a renewal or extension which could be different from the original T’s and C’s.
• Many agencies do not understand the Conduct Regulations and do not deal with the opt-out processes correctly (the Employment Agency Inspectorate put the figure at 88% incorrect).
• Many agencies do not understand IR35 and believe that it is all about the written contract rather than the actual working relationship with the client.
• Many contractors start the work then deal with the contract and this is often too late as starting often means that you are deemed to have accepted the T’s + C’s in their entirety.
• Payment terms – if you have NOT opted out the agency cannot wait until they have been paid by the Client before paying you.
• Payment terms – make sure the rate is stated as plus VAT if you are VAT registered.
• Restriction clauses – these are often too widely drafted so we have seen cases where you cannot work for the Clients client or for someone the client was considering doing business with unless you go through the same agent. A restriction has to be reasonable to protect the agents business and a 12-month restriction may be unreasonable. In a case where a contractor has been “gifted” to the agency i.e. where the agency had nothing to do with securing the role it would be reasonable to ask for all restrictions to be removed even where the agency is the only preferred supplier to the client.
• Contractors should make sure that their business insurances are adequate to cover the liabilities in the contract and ideally the contract should state this.
• Care should also be taken with Intellectual Property Rights and ownership.
• Contractors should make sure they have the complete contract before reading the terms. Often contracts consist of the agent’s terms plus client-specific terms and numerous additional appendices and other agreements e.g. confidentiality agreements. Look out for which of these take precedence in the event of a conflict. I have seen cases where the T’s and C’s contain a substitution right but the client-specific T’s and C’s state personal service is required and it is the client-specific terms that take precedent.

Getting legal advice

We concentrate on IR35 when reviewing working practices and contracts but we do point out unusual terms and would always point the contractor to a commercial lawyer or some of the free legal helplines you get as part of some insurance policies and even credit cards.

Even contractors who have not yet got their business insurances will often find that their home or car insurances give free access to legal advice lines.

Further Advice

These are just some points to look for and as with any other business sector, there is the whole range out there from excellent to poor. The excellent ones have T’s and C’s that mirror the client contract, they tell you what their mark up is, they do not take commissions from accountancy service providers or umbrella companies and they provide a high level of support to contractors and clients.

Contractors should consider where possible using agencies who adhere to their trade bodies code of conduct e.g. APSCo or REC or use those whose practices have been checked and approved by Professional Passport.