What to Include in Staffing & Temp Agency Client Contracts
November 2, 2021
What do clients want from recruitment agencies? As a staffing agency, you are technically and legally functioning as a middle man; your role is to connect appropriate candidates with your clients’ staffing needs.
Therefore, you have a legal relationship with both your candidates and your clients. One that must be protected from manipulation, liability, and other legal risks.
That’s where a contract between the recruitment agency and client comes in. The contract defines the services you’re providing to the client, sets out key service levels you must abide by, defines liability between each party, and will protect you against the client approaching your candidates directly.
Please note, the below are descriptions of general clauses that are often found in staffing agency contracts. However, this is provided for informational purposes and is not legal advice. It is highly advisable to seek professional legal counsel when developing and finalizing client contracts for your agency.
Creating your Client Contract Template
While you can find countless example staffing agency-client contracts online, keep in mind that every agency’s circumstances are legally and functionally unique, and will depend on factors such as location, size, and structure. With that being said, there are some fundamental components of any staffing agency client contract template to take into account:
As a staffing agency, what services do you provide? It is absolutely essential to the success of your relationship with the client to precisely define exactly what you will do for them. This ranges from recruitment, retainer services, and the obligations that lie within both.
You are the intermediary between client and candidate. That intermediary status and what it entails must be clearly defined. Without it, you could legally be cut out entirely from the equation after putting the two parties in contact.
The key here is to define the terms of engagement. This includes how and when communication between candidate and client is conducted, how you will manage candidates once placed into assignments, how payment will work between the three parties, and any exclusivity that’s been agreed.
Furthermore, you should include a re-engaging clause within your recruitment agency agreement. That way, if the client wants to re-engage a candidate they did not previously select within a certain time period you are still compensated.
Who is responsible for what? That’s what liability clauses answer.
The terms and conditions of liability will range from Intellectual Property, decisions that the client may make without prior authorization, and anything pertaining to the candidates.
- Intellectual Property (IP)
The nature of a staffing agency-client relationship means there will be a crossover of IP from both the agency’s side and that of the client. For example, a staffing agency is commonly tasked with publicizing jobs on the client’s behalf. Within these postings, there is bound to be information about the company, trademarks, and precise position details. Protections for the usage and distribution of said IP can avoid potential legal disputes down the road.
- Sensitive Information
Staffing involves the handling and processing of sensitive personal data. Additionally, as we are seeing in industries across the board nowadays the mishandling of data, data breaches, and hacking present potential major issues.
Stipulations must therefore be put in place to identify which party is responsible for what should any of these incidents occur. For protecting all parties involved, and reducing legal risk, you must include personal information clauses. These are clauses that outline in detail who the responsible parties are for any potential breaches or issues that may occur involving this sensitive information.
Making the decisions of who gets hired and how must be laid out in great detail. For instance, the entire hiring process, step-by-step, should have a blueprint from both sides. This will not only alleviate any legal worries but any possible power struggles between the parties can be nipped in the bud here.
First and foremost, any staffing agency should have a predetermined pricing model; whether it’s fixed-fee, project-based, value-based, performance-based, or retainer-based.
We are all very familiar with the awkwardness that can arise when pricing and fees come into play. However, the inclusion of your recruiter fee in the contract between recruitment agency and client cuts out the possibility of disagreements or disputes over pricing from the jump.
Finally, setting up a proper fee determination for your contracts will simplify your pay and bill rates for both candidates and clients.
The long-term health of not just your relationships with clients, but the overall success of your agency is dependent on these contracts. The terms and conditions, clauses, and obligations laid out in the recruitment agency-client contract will lay the groundwork for the future relationship with your client and will protect you in a worst-case scenario.
As a staffing agency, you have many hats to wear, a well-thought-out staffing agency-client agreement will help you to have one less thing to worry about!