Employment Agency Contract Agreements Defined
Employment agency contract agreement, is a contract setting out the terms by which an agency is employed to provide a temporary worker to a client.
Such contracts are subject to the rules specified and adopted by the Employment Agencies Regulations 1976. They provide the framework both for the introduction of the temporary worker itself and the subsequent dealing between the agency and the "employer".
Employment agency contract agreements will typically include matters such as:
- time and duration of work
- payment and method of calculating pay for the temporary worker
- when pay is to be made
- any provision for accommodation
- who will provide the equipment required
- how the worker’s time should be recorded
- what happens when a job finishes
- whether the agency or client may terminate the assignment before the date
It should be noted that a failure by an employment agency to provide its workers with an employment agency contract agreement which meets the requirements set out by law can result in criminal liability for the employment agency provided that it brings a prosecution within 6 months of the alleged misconduct having first occurred.
An employment agency contract agreement has a particularly crucial role in situations where a situation of "equal pay" exists or alleged to exist between an agency worker and another worker, who is supplied by the same employer . In such cases, provided that the agency worker has a valid contract which expressly covers the right to equal pay, then the normal principle that there can only be one form of employment contract for any single worker can apply. This means that there is only one form of equal pay (same rate for same work) and it binds both the agency worker and the other worker. The other worker cannot claim a right to equal pay as such but can only assert such a right through their Service Contract and be guided by that arrangement.
Until recently, the general perception was that these contractual arrangements were not effective if there was no express reference in the Agency Worker Contract to this aspect of pay. However, this is not correct. The Tribunal in VF (Guernsey) Ltd v Heeley & another [2011] IRLR 277 (on appeal in the EAT) confirmed that the authorities concerning equality of pay in the context of Part-time Workers Directives still apply to claims involving Agency Workers. The EAT confirmed that the contractual rights can be those contained in the employment agency contract agreement. The Contract must be central to the operation of the business and sufficiently transparent to comply with the principles laid down in the Equal Pay Regulations.
Vital Components of an Effective Employment Agency Contract Agreement
The key elements of a contract agreement of this sort will vary according to the particular services being provided and the type of arrangement you are entering into with the agency in question, but broadly speaking, all employment agency contract agreements should include provision for the following:
Terms
The terms of the agreement should be specified, including when it will begin and end, how long it will last and whether or not in the event of a dispute the agreement should be terminated or allowed to run.
Service Fee
The fees payable to the agency during the course of the contract period must be made clear, including how they will be calculated.
Payment Terms
How payments will be made, including whether they will be monthly or otherwise, and if there are any penalties for late or missed payments.
Agencies Responsibilities and Liabilities
Outline the responsibilities of the agency operating under your employment as agent, including the vetting of candidates, guaranteeing the lineage of candidates and indemnity against losses, damage or injury caused by a candidate.
Your Responsibilities and Liabilities
Make clear what the employer is providing for the contract period, assistance with relocation, housing, vehicles, specific employees tools, insurance, indemnity and the sharing of the risk of any losses.
Contract Duration
It is also vital that you make provisions for the length of the contract, whether it can be renewed and the terms under which it can be terminated.
Legal Implications and Compliance Requirements
Legal Requirements and Compliance
Given the important status that an employment agency contract represents, having a proper legal standing is a must. Doing so ensures that the recruitment agency isn’t at risk of being used or taken advantage of by its clients and that they can work effectively within the legal framework of their profession. Knowing what to include within an employment agency contract agreement is based on adhering to laws and legislation that helps to maintain fairness to the process. This involves both the UK and EU when it comes to recruitment agencies placing a number of temporary workers within the same organisation.
The Agency Worker Regulations 2010 is one such example of legislation that factors into an employment agency contract agreement so that temporary workers can expect the same entitlements as full-time and permanent employees of a company after they’ve been with them for at least 12 weeks. This is another reason why having a written contract is essential as the length of time can be determined and therefore the temporary worker will have access to the same benefits and pay as their permanent counterparts at that client organisation. An appropriate written agreement will factor this in but also go into further detail regarding the standard and nature of tasks expected, agreed and accomplished, including details on how the temporary worker will be paid and what rights and responsibilities exist in terms of health and safety, data protection and non-disclosure of confidential information.
Like many contracts, terminating an employment agency contract agreement can also prove troublesome if not handled properly. This could be under the grounds of resignation from either side, or dismissal under breach of contract, an Employment Tribunal judgment, or other specific conditions such as expiry. An employment agency contract agreement can be terminated by either party subject to their respective statutory rights, under common law or if the contract itself provides a right to end the agreement.
A breach of contract could also see an employment agency contract agreement terminated, which can happen if either the employer or employee does not act according to the terms agreed. It is usually down to the employer to identify a breach but if they haven’t done so within a reasonable period of time, an employee may seek a way out of an agreement where the conditions of their employment are not fulfilled. Where an employment agency contract agreement is concerned, breaches should be identified and rectified as soon as can be.
Common Pitfalls and Solutions
The landscape of employment agency contract agreements is strewn with pitfalls. Some of these arise from the particular features of the industry or the ways in which people prefer to conduct their day-to-day business. One of the main problems I encounter is the temptation to agree terms verbally and to follow this up with a short form email confirmation, usually with an intent to agree a more comprehensive document later on. It is not unusual for all this to prove something of a false dawn. The parties become busy and a proper written agreement is never completed. This sorts of arrangement often ends up in a (hopefully) amicable mis-understanding about the exact terms of an agreement which can lead to substantial wasted effort and expense as the parties survey the field in order to understand their rights and obligations. Another problem is where a putative contracting party argues that it is contracting with another company within the group to which its own company belongs. This leads to some very difficult issues about whether contracts actually exist and which group company is actually party to the contract . The best policy is to make it clear at the outset that the correct contractual parties must be named in any future documentation and that no agreement could be said to exist until that matter is conclusively settled. There are also some more subtle issues. It is sometimes assumed, for example, that additional terms can be readily construed when the terms have been agreed between the parties but no express terms relating to other aspects of the relationship. This can lead to an unequal relationship where one side’s terms are effectively forced on the other party more or less unilaterally. The parties should take care to make explicit provisions relating to the following matters: Any employment agency contract should include such terms and others to suit the particular business, ideally built into a comprehensive written document. The basic purpose is to set out clearly what is meant to be agreed and to avoid the dispute which would flow from having to try and reconstruct a contractual agreement in the absence of detailed emotional recollections of what was said. There are various drafting options but it makes sense at this point to have a template agreement drafted.
Objective of Negotiation in Contract Agreement
Negotiation is a critical part of employment agency contract agreements, whether the ultimate contracting party is the employment agency or the employer. Negotiating in good faith is necessary to secure a contract that truly reflects the nature of the relationship between the parties and protects an agency’s right to be paid.
Agencies that only use an agreement provided by an employer risk not being compensated for any work they do if the employer disputes the contract terms. An agency has the right to negotiate the terms of any agreement it signs with an employer. Alternatively, agencies may create their own contracts for use with employers. Without consultation with an attorney, though, many agencies may overlook the risks associated with some of the provisions that those contracts contain.
Employers are frequently guilty of asserting their bargaining power by offering an agency their form of contract rather than consulting with the agency to craft a mutually agreeable contract. Sometimes, the terms of the contracts that agencies receive from employers are not the terms offered to other agencies. In some cases, this can lead to litigation between agencies as they compete to be the employer’s agent.
Agencies can best avoid litigation between themselves by creating a standard contract that clarifies the rights of the agency and the employer. If an employer has its own contract that it refuses to negotiate, though, the agency can protect itself by consulting with an attorney to ensure that its rights to payment for all the work it does for an employer are settled before the job starts and are clearly stated in the contract.
When to Consult an Attorney
When you are entered into a contract between an employment agency in the first instance, it is always good practice to seek legal advice as to what your obligations are under the contract.
Consulting with a lawyer may highlight areas where the employer may want to amend certain terms of the contract prior to signing what may be a standard form agreement, or whether the terms of the contract leave the employer unusually exposed . In reality, an employer may have little room for manoeuvre when it comes to negotiating the terms with the employment agency, therefore notwithstanding our recommendation of taking legal advice prior to entering into any contract, there are a number of other situations where seeking legal advice may be particularly prudent:
It is important to note that there is a Statutory Contract Assessment Regulation which applies to both workers and hirers, but further advice should be sought if there is any suggestion of a term being reciprocal or such like as there are specific consequences associated with the latter. Such advice will again include considering options for using parallel contracts.