7 Things to Check in a Client Contract before you Sign

Contracts are the back bone of any deal done in the recruitment industry. Whether it is a contract, temporary or permanent placement made, it is always vital to ensure that the contracts are compliant, correct and agreed before the candidate goes on site. Clients will insist that agencies sign their Terms and Conditions or they might sign your own contract templates which is why we would like to share some clauses you should always check before you put pen to paper:-

  1. Payment Terms of your Invoices – Making a placement is one thing but getting the invoice paid is vitally important. Understanding how and when your invoices will be paid will ensure payment will not affect your cash-flow requirements. Watch out for Pay-When-Paid clauses (i.e. client will only pay your invoice when their client pays them) as these invoices may not be funded by your invoice finance company. Clients will try and push payment terms as long as possible so ensure you are covered by being able to charge interest should the invoices become extremely overdue for payment.
  2. AWR Liability – The Agency Workers Regulations have to be covered in the contract to protect the client and the agency from any future claims from the candidate. By acknowledging that you will work together to ensure you are providing an AWR compliant placement shows your willingness to protect all parties. Watch out for clients who try to absolve their liability from AWR and pass this fully onto the agency as this means the client can make any changes they like to the pay and working conditions within their organisation which could lead to a claim directly onto the agency.
  3. Introduction Fees – Once you present a candidate to a client, you are the one introducing them which means that if they engage them through your agency, another agency or directly, you are entitled to charge a fee for this service normally for a period of 6 to 12 months. Ensure that this is covered in all client contracts to know what rates you can charge and for what period before you start sending candidates over to them. This would also cover candidates who complete a contract placement and then work directly during the 6 to 12 month period following the end of their contract or candidates who are interviewed, not taken on but then engaged directly without your agency involvement.
  4. Rebate Periods – On any permanent placement it is always advisable to check the rebate periods given to ensure these seem fair and workable for the amount of time and energy you have put into making the placement. If to make the placement you have had to incur costs such as job board advertising, meeting the candidate plus your time then this should be compensated in some way by ensuring the rebate is correct. We would also recommend that you have a clause within the contract that if the invoice is paid later than the agreed terms then the rebate becomes null and void to ensure they pay the invoices on time.
  5. Liabilities – Reviewing the liability sections of any contract is important to ensure that you are not taking all the responsibility for the candidate during the placement where they are under the direction of the client on their site. The client should be taking some of the responsibility for the candidate whilst on their site as they agreed to take them in the first place.
  6. Termination of the Contract – No one wants to have a contract that is terminated early but it does need to be covered to ensure that the agency and candidate are not penalised. Check that the notice period is long enough and in line with the candidate contract as you do not want the candidate to have 1 weeks’ notice but the client has 4 weeks or vice versa as this will cause timing issues at the end of the contract. Also, ensure that there is no clause which states that if they do terminate the contract any outstanding invoices do not have to be paid.
  7. Acceptance of the Contract – Reviewing a contract to get the candidate working is the first hurdle as it is advisable to ensure that before the candidate steps on site that the contract is accepted either with a signature or confirmation email of the terms. The use of e-signature programs is becoming more popular in the industry but having a signature on a contract always confirms the contract has been accepted. You can also have trigger clauses which say that by receiving the contract and by the candidate working on site the contract has been accepted but you have to ensure that the contract has been received by the appropriate party (delivery/read receipts) in order for it to be valid.

With changes in legislation occurring on a regular basis it is always advisable to seek legal advice from your company lawyer should you have concerns regarding clauses in contracts. It is always advisable to get your contract templates reviewed on an annual basis to ensure that they remain compliant and updated to protect yourself against any loss of profit or claims against your agency.

All the advice given above is a guide and any legal advice should be taken before acting upon any part of the article.