Recruitment: Risk, Contracts and Insurance
The contract terms agreed between two parties defines the services to be provided, the responsibilities, and the risk that each will accept. These documents are the key to determining the level of exposure that your business has in relation to your workers and it is vital that you understand them or have them professionally reviewed.
A recruitment agency should look to use their own Terms of Business (or ‘standard contract’) as a preference, which shall ensure that the liabilities of each party are clear on the services provided.
When assessing recruitment contracts, you should consider three key issues in relation to responsibility of risk:
- Direction, supervision and control of workers
- Health & Safety of workers
- Liability Insurance
The responsibility for these three issues will vary when providing temporary workers.
Generally, with ‘standard contracts’ and terms of business, a temporary worker – once placed – is the responsibility of the client and not of your agency. The client is responsible for the direction, supervision and control and the health and safety of the worker and the client’s liability insurance should cover the worker. Whilst you might have the contractual obligation to ensure they are suitable for the role, once the client has agreed to take them on and they are in the role, they are the client’s responsibility.
In this circumstance, if the worker is injured on the job or causes third-party damage during their work the liability is with your client and thus your client’s insurance should kick in to cover the costs, where their insurance is applicable and able to do so.
Using standard terms of business is therefore the preferable solution in most cases.
Sometimes it is unavoidable that you must use your client’s terms of business or ‘non-standard contracts’. With these contracts or terms of business, you may find yourself taking on the risk relating to any of the three issues mentioned earlier. Depending on what your contracts say, you may need to have extra insurance in place too. This is a key area for risk management and insurance; you must be sure you understand what is your responsibility and what is the client’s once the candidate is delivered.RecruiterCover is a specialist insurance provider for recruitment and employment agencies. We are proud to work with SSG and to support their clients, ensuring that they are adequately protected with specialist recruitment agency insurance and risk management advice, which includes a free contract review service. We will evaluate your contracts and make you aware of where you are liable and where you aren’t.