A recruitment agency agreement is considered to be an agreement that is made between two parties where one party which is the recruiting or a recruiting firm is hired by the other party including the client company. This is done to identify and represent qualified candidates to work along with the client as the client pays a fee to the recruiters that are set by the parties. This recruitment agreement allows you to clearly set out the necessary obligations.
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How to Create a Recruitment Agency Agreement?
Step 1: Provide the Basic Details of the Parties Involved
A contract always begins with each Party’s basic details. If the most basic information is lacking a contract can not be named such. The contracting parties must include the names of their businesses, these names should be exactly the one the listed in their business registration form, full office addresses, and the names of the individuals representing the contracting parties. Both parties may include their business existence but this is not compulsory.
Certain information relating to each party such as the products or services they offer, the number of employees, financial status must be excluded from the contract as these forms of information or data are not relevant to the contract’s actual purpose.
Step 2: Mention the Terms of Work
The meaning of the contract can be found in the terms of work proposed by one party or the offer and the other party or the acceptance accepted the same working conditions. One party outsources recruitment work for this type of contract, specifically a recruitment agency contract, and the other party or the the recruitment agency accepts the said job.
The level of work and payment must be clearly set out in the contract and defined. The party offering the work may restrict the roles to be performed by the other party or the recruitment agency or give the other party total or complete control as regards recruitment services.
Step 3: Agreement Must Abide by the Laws
To execute a contract it must comply with local and national laws. Before they even plan to enter into the contract, all parties must be legitimate businesses i.e. full contractual specifications, safe working conditions for workers and compliance with fair labor standards as mandated by the government.
Next, all parties will enter into a valid arrangement or agreement that falls within the legal requirements of the laws governing all types of companies or business entities. For example, both parties cannot participate in the sale of illegal drugs, the importation of endangered animals, the involvement of other companies in a conspiracy or theft, etc.
Step 4: List Down the Mutual Obligation
The parties must have a mutual purpose in all forms of contract as regards the terms specified in the contract. All parties will, and not less than that, be 100 per cent receptive to all contract terms. Once the signatures have been attached in the document, this ensures the parties have to do everything stated in the contract.
In case one or both parties are not much satisfied with the work performed after the agreement ends, then they can address their complaints and come to a conclusion through a legal authority — a court or tribunal.
Key Clauses in a Recruitment Agency Agreement
A detailed description of the programs you will be delivered should be included. For example, are you going to screen applicants and give them to your client? Or will you be also conducting any initial interviews, or calling referees or provide any training? Make sure to provide a description of the services that should be set out in a proposal or a quote. Its advantage is that it specifies the exact scope of your recruitment services and also ensures that you will only be required to provide what you have actually agreed to provide.
Besides including a depiction of recruitment services, you should also indicate whether you will be providing search services for retainers. A retainer quest varies from a traditional recruiting agreement because payment will not depend on the applicant being recruited by the client. Its advantage is that the deposit services are often contingent upon an applicant being employed by the client. Including a provision outlining retainer services would guarantee that you get paid to provide a shortlist of candidates accordingly.
While some recruitment agencies are working on a fixed fee basis, others are also operating on a commission basis. How you measure your salary is set out in the recruitment agreement. For instance, several agencies measure commissions according to the salary of an applicant. The commission percentage may also improve in proportion to the nominee’s salary. In making sure you communicate the method of calculating your fee freely in the employment agreement, you are reducing the risk of emerging payment conflicts.
Introduction of the Candidates
Your recruitment agency agreement must set out the conditions which will lead to the payment of a charge. A premium is typically paid for presenting a candidate to a customer. Furthermore, if that does not result in the applicant being hired immediately, it may be unclear if payment is needed. A proper recruitment agency agreement should ensure that clients pay you for the candidates presenting them. To avoid paying your fees it should prevent the client from going directly to the candidate.
Re-engaging the Candidates
A recruitment agency agreement should also provide for the possibility of receiving the fee if a company re-engages an applicant within a given period. A client will, for example, recruit an applicant for a short-term project and pay the fee which is likely to be a lesser fee. Eventually, the same company may choose to recruit the applicant on a full-time basis which is likely to be at a higher charge. Its advantage is that by including a clause that requires a customer to pay your fee if they re-engage a customer, you will ensure the customer pays the full amount you owe.
Based on your recruiting agency’s business model, you may be making a substitution guarantee to your clients. This is a promise from you that a candidate can find a replacement if the candidate leaves their job within a specific time frame. Its advantage is that it will ensure that your duties for a replacement are set out by including an express replacement guarantee clause.
A recruiting agency agreement will restrict the responsibility for any details you provide your employer with about the candidate. However, there may be some candidate information that you can not validate, you may do the appropriate checks on the information that a candidate provides. Its advantage is that if an applicant presents you with misleading or incorrect information, this will limit your responsibility to your client.
When a company recruits an applicant without carefully testing the suitability of the candidate, a recruiting agreement will restrict the liability. It should be up to your client to determine if a candidate is suitable for their business. This will limit the exposure if a company recruits an applicant without having to perform their candidate evaluation.