Even more on the recruitment agency plate

Besides the entire face of recruitment changing with the increasing use of social media and online job sites, it seems that recruitment agencies now have one more big thing to contend with – the Agency Worker Regulations coming into effect in October this year.

The purpose of the regulations is to give temporary employees the same rights as permanent employees. That is, after 6 weeks working for a company, they will be entitled to sick pay and holiday leave as well as some other benefits. Employment statuses will be changing and the role of recruitment will be changing along with them. Liability has always existed where the agency has made a mistake in hiring an individual – didn’t check references or didn’t confirm a certain qualification – but now these placed workers might technically fall under the “employed” by the recruitment agency, even if they’re off site and being supervised by another company.

What does it all mean? Well, recruitment agencies have, until now anyway, mostly ever been liable for the people they directly employ within the agency itself and for any mistakes they have made. Now, agencies can be found responsible for people who don’t have anything to do with recruitment who make a mistake in the workplace – a software engineer who produces a faulty system or a medical professional who gives the wrong treatment, for example. That is, they can be found “vicariously” liable for the actions of their placed personnel, even if they made no mistakes and checked all their credentials when hiring them.

It’s fair to say that there’s a little bit of panic in the industry. Everywhere you look, articles are being written about the implications of the regulations. What about temp to perm workers? How easy will this to implement? What happens if clients don’t consider the implications? Will they withhold fees? And finally, do I, the recruitment agency, need to get insurance for my placed personnel? The answer to that one at least is easy. Yes, that would be advisable.

Why vicarious liability matters

Vicarious liability is a legal term stating an employer can be deemed liable for the actions of another. Crucially, the ‘employer’ does not necessarily have to be at fault for the accident, and can be deemed liable if found to have authority over the actions of the person who caused the accident, or if found to be responsible for their actions in another way.

Because the employment status of temporary workers is so unclear, recruitment agencies can be deemed their ‘employer’ and thus liable for their actions. Most importantly, this means a recruitment agency can be considered liable for the actions of a temporary worker even when they have not been negligent in the recruitment process. In such a scenario, the recruitment agency would be considered ‘vicariously liable’ for the actions of the temporary worker.

The impact of non-standard contracts

Hiring clients are increasingly requesting recruitment agencies to sign contracts which contain onerous insurance clauses. The employment status and responsibility for supervision direction and control of temporary workers is often unclear, or even passed back to the agency. These contracts increase the prospect of a recruitment agency being found vicariously liable for the actions of the temporary workers so be clear the insurer is comfortable covering such contracts.

What to look for in a policy

First things first, purchase a specialist recruitment product. Make sure vicarious liability is clearly defined and included in the policy wording and fully extends to include the actions of temporary workers.

Avoid miscellaneous policies because they typically fail to mention vicarious liability and those which do often contain confusing exclusions or endorsements which makes the extent of coverage very unclear.

Be wary of policies which restrict coverage to circumstances arising out of the negligence of the recruitment agency or policies which specifically exclude the actions of temporary workers. Exposure to vicarious liability does not necessarily depend upon recruitment negligence

Lastly, check out our product for recruitment, employment and staffing agencies. It has clearly worded vicarious liability clauses, comes as a modular package and is very competitively priced. Click here for more info.