Are end client contracts a clause for concern?

Three key terms to pay close attention to and what this type of contract means for your Recruitment Agency

Whereas an end client would usually sign up to your agency’s terms of business when arranging a placement, it’s now becoming increasingly common for Recruitment Agencies to be asked to sign contracts directly with the end client themselves.

Make sure your insurance is up to scratch
Whilst there’s nothing wrong with signing a contract with the end client, it’s important that these new contract terms are carefully reviewed, to make sure that the insurance your agency holds is adequate, should things not go to plan whilst an individual is on their assignment.

In this situation, you might ask:

• Who accepts liability for the individual whilst on assignment – my agency or the end client?
• What limits of indemnity does my agency require?
• Is my agency sufficiently insured if a situation does arise and if not, what additional covers do we need?

As well as making sure that the insurance your agency holds is fit for purpose, it’s also vital to check that the contract doesn’t contain any particularly demanding or harsh terms that could impact your agency.

Three key terms to pay close attention to:

1. Acceptance of Liability – certain liability or indemnity clauses mean that a Recruitment Agency will accept all responsibility for the actions, errors and negligence of the personnel supplied, whilst they’re working on assignment.

The implications of signing a contract containing this clause could mean that your insurance may not provide the correct cover or if it does, at more of a cost to your agency. Also, if an accident occurs involving a placement you have provided (e.g. they’re seriously injured), you could be held legally liable.

2. Waiver of Subrogation Rights – this is a clause that prevents an insurer from recovering any losses back from the end client in the contract.

Maintaining your and your insurer’s rights of subrogation, is usually a condition of your insurance. It’s important to note that acceptance of a waiver of subrogation without your insurer’s prior written consent is a breach of your insurance terms.

3. Hold Harmless Agreement – this is a promise not to sue, even if the party who is “held harmless” caused or contributed to the accident or loss.

If your agency agreed to hold the end client ‘harmless’, this would mean that you couldn’t redirect any claims occurring to the end client, even if the end client were at fault. As a result, your insurer may pick up any claims that occur, thus having a large impact on your future renewal premiums.
Stay protected

It’s important that you’re protected against liability and professional indemnity claims that arise from your business activities. Contact George Hutty at Sutton Winson on 01444 251 157 or visit the Recruitment & Payroll section of our website, to see how we can help protect your agency

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