This blog accompanies the video that I recorded for The Recruitment Network on the dos & don’ts for contracts. In my video I whittled them down to a handful on both sides, although there will be others that don’t appear in these lists.
DOS
- The primary do is to have your contract terms properly drafted, and to make sure that they contain everything you want. One of the few luxuries of having your company’s own terms of business is that you get to say what goes in them. Obviously there are various restrictions and reality checks, but you are in the driving seat for how you want to do business. If you want specific payment terms or candidate ownership periods, this is where you can say so.
- Once you have your own contract terms, make sure you send them to clients. That sounds pretty basic, I know; but I have lost count of the times that a consultant has got over-excited at the prospect of making a placement, and has forgotten to send the actual terms. That doesn’t necessarily mean you have no contract with the client, we all know that verbal and non-written contracts exist, but you may miss out on your specific terms of business if the client hasn’t actually got them. My advice is to send them out at the earliest possibility, and if in doubt, send them again!
- If you can get your contract terms signed, even better. Many terms of business rely on a deemed acceptance clause, but this isn’t fool-proof. If you can get your client to sign your contract terms, or at least acknowledge their acceptance of them by email, it’s going to be a whole lot easier to rely on and enforce them.
- Do try to exclude “effective cause” if you can. Recruiters’ contracts are agency contracts, and agency law says that you have to be the effective cause of a placement to earn a fee. It doesn’t have to be in the contract, that’s just the law. So if you expressly exclude having to be the effective cause it is possible to override agency law, and still get a fee for a back door placement.
- Finally, think about Statement of Works agency contracts. Not necessarily jump on the bandwagon and declare that is the only way you are going to work in order to circumnavigate IR35; but whether they are suitable for your business model. SOW contracts are not a magic bullet to overcome the introduction of the Off-Payroll Rules to the private sector. They require re-shaping your business model because it will essentially be you on the hook for delivering the project. But if you don’t go down that route, consider making your project or assignment schedule more SOW focussed, mapping out the deliverables and milestones that the consultant is there to supply.
DON’TS
- Please don’t borrow another recruitment company’s contract terms. You might get away with it, but you probably won’t. I am sure you all know what I am talking about. It’s very tempting to think you can use another company’s terms that they have done the hard work for you. But would you know if they got them right? Even if they did, your business is your business, and you deserve to run it your way, not in accordance with another company’s terms.
- Don’t mess around with yours. If you have gone to the trouble of having your contract terms drafted for you, please don’t tinker with them. That is actually a personal plea from me, as the drafter of many sets of terms. The reason you ask a solicitor to draft them is because that’s what we do for a living. Nothing upsets me more than when I see a set of terms I have lovingly crafted using my 20+ years of legal experience, and my client has decided to shoehorn an extra bit in. I promise you, a professionally drafted contract will have everything you have asked for in there, so please don’t start to play around with it!
- Don’t be bullied by your clients to amend your contract terms if they push back on them. There may be some terms you will compromise on, say payment terms. But there will be other clauses that are what they are for a good reason – to protect you. I’d suggest checking with whoever drafted your terms before giving in to client pressure. And if you do agree to change something, make sure it’s recorded in writing. What you don’t want is to have a client push back on a term, not agree anything and then have unenforceable provisions.
- My final don’t is just a personal bug bear, so you can ignore it if you wish. It’s combining perm and temp terms. I don’t like it because although it doesn’t affect the legal content, it makes for an unnecessarily long contract. Perm and agency contracting are 2 different animals, and should be treated as such. Most of the time a perm client doesn’t need to see agency terms and vice versa. Combined terms are unwieldy at best, and at worst they could put a client off if it thinks you don’t know what they need.
As ever, if you have any queries about the content of my video or blog, please feel free to have a read of our Legal services for the recruitment industry page and do not hesitate to contact me on 0333 400 4499 or at lucy.tarrant@cognitivelaw.co.uk
By Lucy Tarrant
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