A lot of recruitment consultants will go through their life in recruitment work without ever having a dispute over fees. Their clients place orders, pay on time and everyone is happy. Unfortunately there are sectors where regular disputes occur and other recruiters will spend an inordinate amount of time messing around with taking action to recover fees and then enforcing court judgments. A few tips to reduce the risk of fees being missed are below. lost or contested.
Agree Terms – Trigger Actions
Its very easy for your recruiters to forget to send these out, but if you have terms agreed and a client disputes payment, its a hell of lot easier to enforce them in court! Most recruiters have what a re called ‘trigger actions’ at which point the fees kick in. For example, if you include a clause that says by interviewing a candidate you accept our terms. This is an accepted solution at court. It does mean that although acceptance can be confirmed through a signature or other forms of express consent, such as email or digital confirmation, it is not always necessary. Trigger actions involving interviewing are usually the easiest to introduce and enforce. If you have nice clients who will not mind signing terms prior to an introduction, then this is similarly an easy way to get terms in place. However a lot of agencies can avoid hassling clients simply by using a trigger action.
Watertight Agreements
Second in the list of checks is to ensure that your agreement is watertight. Do you have definitions in there of when a fee is due – for example the type of employment they have taken. Do your terms cover consultancy, self-employment and employment? Do they cover situations where you introduce a candidate to one party and they are employed by a second? Are you covered by “we know this candidate already so we are not paying your fee” or “we contacted them directly via LinkedIn so tough luck on your fee”. Check your terms carefully – cheap and cheerful way to see what else is going on in the industry is simply to call round other agencies and ask for a copy of their terms..
Read 3rd Party Terms Carefully Before Agreeing
Don’t forget that when agreeing terms, you are working on a business to business basis and anything goes! Do not agree client terms without reading them through carefully. We have seen agreements that include a 12 month 100% rebate, a right to recruit after 3 months after the first introduction if it is not successful and much more horrendous stuff besides!.
Compliance
Usually unlikely to apply, and with regulation and enforcement in the recruitment world being incredibly weak, it is not likely to ever be a major factor unless government changes its approach. However if a client spots you are not compliant with the Employment Agency Conduct Regulations or there is an IR35 related issue and threatens to report you to the Employment Agency Standards Inspectorate or HMRC, you may be less inclined to pursue a claim. Don’t give your hirer the ammunition to dispute your fee. Extremely minor point for most recruitment agencies.
Always Examine Your Case from the Perspective of the Other Side
In any dispute, it is essential to understand the strength of your opponent’s claim and potential areas of risk. If your case has major weaknesses it can be important to know when to walk away and not pursue. Similarly if you work out early on that your client has no assets and there is little prospect of recovering money from them then there can be no merit in pursuing them further. Likewise, if you know your client is off their trolley you really don’t want to go down the court route! Check your case and make sure you know the strengths and weaknesses yourself.
For more detailed advice on safeguarding your recruitment fees, get in touch! Always happy to have a discussion. You can also use the Interim Lawyers Platform to get independent reviews of terms undertaken by experienced commercial contract solicitors from just £85 per hour.