Recruitment Law: The Importance of Knowing the Regulations

As a recruitment consultant your days are generally spent
focusing on making sales and dealing with client
requirements. Getting roles, finding candidates, chasing
feedback, organizing interviews, the list goes on, leaving
little time to focus on the clients themselves. But with
such focus on making a sale, are you inadvertently leaving
your clients open to risks?

Over the past few years government legislation has
tightened the regulations governing employment law, yet
very few recruitment consultants are aware of the
implications that theses changes have for their clients. It
is shocking to think that companies are using agencies to
provide services that are potentially opening them up to
law suits that may cost them millions of pounds.

There have been numerous instances over the past few years
which have brought home the risks faced by employers today.
The most notable of which was the case of Muscat vs. Cable
& Wireless Plc. In this case, a temporary worker was able
to successfully sue Cable & Wireless for wrongful dismissal
because the contractor was able to prove that the working
situation was one of "implied employment".

"Implied Employment" refers to a situation where a
contractor working for a client through a Limited Company
and a recruitment agency is treated by the client the same
as a permanent employee. This includes having to organize
annual leave, contract extensions and pay rises with the
client directly. From a recruitment agency standpoint, this
is unacceptable.

First and foremost, there is rarely a direct contract
between a contractor and a client, the contract is between
the contractor's Limited Company and the agency. The agency
will then have a contract with the client to provide the
services of the contractor's Limited Company, not the
contractor specifically. Quite simply, any contractual
negotiations, any annual leave, sick leave etc, all of this
must go through the recruitment agency. Line managers who
involve themselves in these conversations or behaviours are
opening themselves and their companies up to some serious
legal risks.

Yet many agencies do not train their consultants about
these regulations or the risks that their clients face. It
is understandable that managers within an organization
would not be aware of the legal aspects of hiring
contractors. Therefore it is the responsibility of the
recruitment agency to ensure that the client is aware of
the risks and that the consultant ensures that both the
contractor and the managers work in such a way as to negate
those risks.

Thankfully these lawsuits do not happen very often but this
does not mean that recruitment consultants can continue to
be complacent. These cases still happen, this behaviour
still continues and clients are still put at risk because
consultants are not trained sufficiently in the
requirements of contract law. By no means should
recruitment consultants become employment law experts, but
it is important if they are working within recruitment, to
understand the simple things which can be done to minimize
these risks.

Firstly, consultants should always read the contracts which
go out to their contractors. If at any point a contract
uses terms like "the employee" or "the team" this can be
considered implied employment. The contractor must always
be referred to as "the Limited Company" or "the Company".
That is because the contract is with the Limited Company,
not the individual contractor, hence the presence of the
right of substitution clause.

It needs to be reinforced that any contractual negotiations
or annual leave must go through the agency. As the contract
is between the agency and the client, the contractor and
the client have no legal grounds to make these
negotiations, only the agency can negotiate with the client
on behalf of the Limited Company. It is recommended that
recruitment consultants understand the basics of the IR35
regulations. These are all laws which govern the industry
that you work in and can have a direct impact on your
working life.

To learn more, speak to your agency's legal team. They
should be in a position to provide training and information
about the regulations and give a deeper understanding about
the nuances of contract law. For more information on the
Muscat vs. Cable & Wireless Plc case visit :
http://www.msi-network.com/Content/general/UK_employment_law
_update_3.aspx

Look beyond the sales and understand your industry. Not
only will you be protecting your clients and your
contractors, you will be building trust with them making
yourself a consultant they will want to work with again and
again.

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Mandy Leonard is a co-founder of Enabled IT, which
specializes in working in partnership with clients to
provide a customer centric recruitment solution. With
experience in both the recruitment and technical sector,
she has specialized in sales and management training to
optimize the abilities of sales forces.
For more information please visit
http://www.mandyleonard.com or e-mail
contact@mandyleonard.com