Start-up Recruitment made easier

• Terms of business with clients
• Registration form for candidates
• Terms with candidates
• Contracts with internal staff
• Privacy notice for your website
• Key information document (temp supply)

A recruitment company’s own terms of business are the foundation of a commercial relationship. They should specify the service that is being provided, the responsibilities of the recruitment business and client. For example, on matters such as background screening, or on-site compliance, but most importantly details the circumstances in which fees are payable, what is payable and when.

A good set of terms displays a professional approach and caters for clients who do not have their own terms. Strong terms do not prevent a business from exercising discretion, negotiating, or making commercial decisions but can offer a strong starting point for enforcement or negotiation.

A single fee earned, or liability saved by a good set of terms will almost always outweigh the cost of initial investment.

This depends upon the most likely business activity and client base. If the business offers both temp and perm or direct recruitment services to all clients or is predominantly supply based, then combined terms would seem sensible.

However, if it is likely that some business may engage only for perm or direct work, then having separate perm/direct terms may be preferable.

If a client or RPO issues terms to a recruitment business, it is essential that the business is comfortable with those terms.

There would be key elements to consider, specifically whether fees are payable in all expected circumstances, or whether there may be barriers to fees being due, whether responsibilities are reasonable and limited to matters within the control of the business and whether liabilities are reasonable.

Client /RPO terms should also be checked for detailed processes that need to be followed or (on the supply side in particular) clauses that might need to be flowed down into terms with candidates.

Registering candidates will involve the collection of personal data, so a recruitment specific privacy notice will be necessary.

If the recruitment services involve temporary supply, it is also a legal requirement to issue terms to the candidate and a Key Information Document before providing work finding services.

A business operating as an employment agency and therefore seeking to place candidates in perm/direct roles is not legally required to have terms in place with a candidate.

However, many agencies do have terms in place to be clear as to the scope of the services provided and any limitations.

For example, clarity that there is no liability if a client withdraws an offer, or if work is not found, and to meet candidate expectations.

The candidate terms a recruitment business needs are determined by the way in which a recruitment business engages candidates, and minimum legal obligations.

The main ways candidates are engaged are as employees, PAYE workers, via a Personal service company owned and run by the individual, or via an umbrella company. Different terms are required for each engagement option that a business offers.

If at the point of registration, it is unclear how an individual is to be engaged, for example if this might be umbrella or PSC depending upon IR35 status, or a business wants to use an initial contract for all candidates, then a work finding services agreement is an option.

When engaging with an individual, a business needs to decide what the status of the individual will be, usually whether they will be engaged as an employee on a contract of employment, or as a worker on a contract for services.

Engaging individuals on a self-employed basis should only be considered with specific advice as to the tax and status risks involved.

Each set of terms needs to be compliant with the requirements of the Conduct Regulations, and contracts with individuals also need to be compliant with rules relating to worker or employment status.

Where a temporary worker is to be supplied via an Umbrella, there needs to be an agreement in place with the umbrella, and a work finding services agreement in place with the individual.

Umbrella terms are an essential tool in managing umbrella compliance, allowing you to be clear on matters such as requiring payments, PAYE and NICs, compliance responsibilities, as well as protecting you from competing activity.

A work finding services agreement is the agreement used with an individual who will operate via the umbrella, allowing for compliance with the Conduct Regulations requirement to have terms in place with a work seeker, setting expectations for standards to be achieved, or what can and cannot be done, and also providing an easy mechanism for an individual operating via an umbrella to confirm that they wish to opt out of the Conduct Regulations.

Most personal service company (PSC) arrangements will necessitate terms which support the IR35 status of the engagement, so need to reflect a contractor operating in business on their own account.

It is however essential to ensure that these terms are drafted to reflect other compliance arrangements. Terms can be either a framework, with assignment details then agreed, or specific project-based arrangements.

If working with PSCs, advice should be sought on IR35 and its application.

A privacy notice, which is designed for the services a business provides is one of the simplest ways to meet a huge compliance requirement under data protection laws.

Individuals whose data an organisation collects or uses are entitled to be informed as to how and why that data is being used, and the rights they have.

The majority of this information will not change from individual to individual, so can be easily addressed in a standard form privacy notice, that can be issued to all candidates, included on a website, and linked to in emails and other correspondence.

However, it is essential that the privacy notice reflects the services offered and the reasons why data is processed, for example covering the recruitment process, and legal obligations to retain and pass on data. A recruitment specific privacy notice is therefore essential.

A key information document is in a standard format and should only include prescribed information. Employment agency standards provides templates here, which can be used. Umbrella companies often provide recruitment businesses with KIDs which relate to their business.

However, whilst it is acceptable to rely upon the information an umbrella provides in or for a KID regarding pay, it is ultimately the responsibility of the agency to make sure that the KID is both compliant by the information it includes and properly issued – reliance on an umbrella doing this will not be a defence.