Recruitment and Employment Agencies: Dispute over costs of service?

Have you ever searched through the job market for your dream job? Did you try to do so alone? You may have felt overwhelmed by the number and variety of promoted posts advertised in your field. Did you ever wonder if you had the right credentials? Maybe you asked yourself what the company was looking for in their ideal candidate. Perhaps you felt unsure of whom to reach out to with any questions. 

Recruitment and Employment Agencies: Dispute over costs of their service?

On the other hand, have you ever needed to find employees? Have you found it challenging to find the right workers? Those with the skills, background, and professionalism required to carry out tasks efficiently and effectively? 

If either of these applies to you, you are not alone. The job market is a tricky thing to manoeuvre, even for the most experienced individuals.

Recruitment versus employment agencies

Recruitment and employment agencies work as the middleman in these processes. These agencies concentrate on matching well-qualified candidates with job vacancies in a range of career fields. The difference between a recruitment and employment agency is who their primary client is. 

recruitment agency works for the worksite or employer to find eligible candidates. An employment agency works for the jobseeker or individual looking for open positions. 

With that description, an agency-centred job or candidate search likely sounds like a dream. If you are a company, all you seemingly have to do is hire a recruitment agency and list your company’s needs. They then search the market for the best candidates and deliver them to your metaphorical doorstep. 

Conversely, if you are someone looking for a job, you submit your resume to the employment agency. The agency then contacts you with relevant jobs they find, and you can set up interviews with those companies.

Complaints about agencies: Fee disputes

Unfortunately, this entire process is not as simple as it appears. Complaints about recruitment agencies have shot up over the past two years. Additionally, according to the Employment Agencies Standards (EAS) Inspectorate annual report, dissatisfaction ratings are up to 52%. 

Many things contribute to this metric. That said, a significant point of contention between companies and recruitment agencies has been the fee level for their services, and when these fees are required*. Given the complexities and quick turnover of the job market, sometimes the circumstances around a hire are messy. 

Two scenarios which commonly occur in agency fee disputes are:  

The back-door hire

Say a recruitment agency introduces a candidate to a company. The candidate is not hired at the time of the introduction. Still, several months later, the company has another job availability, remembers the candidate’s credentials, and contacts him/her. The candidate ends up getting hired by the company, without the involvement of the agency. The agency later finds out and wants to claim a fee for the hire, because they were responsible for the initial introduction.  

The fee-fight

In this situation, a recruitment agency introduces a job candidate to a client. The company decides to pass on the candidate; no hire occurs. Some period of time later, a second agency introduces the same client to the same company. The company now decides to hire the client. Based on this hire, they are liable to pay the second agency directly involved. However, the first agency feels they are also entitled to a share of the fee because they were responsible for the initial introduction. They demand payment.

As you can see, it can be challenging to determine when and where fees need to be paid, and to whom they need to be paid! The process is free to potential employees, but employers do not want to spend unnecessary fees on someone they may not even end up hiring. At the same time, it is understandable that recruitment agencies want to be equally compensated for their efforts.

*Fee disputes are not common on the employment agency side, as their services are free.

Proactive steps to avoid fee disputes

Most disputes on recruitment agencies’ fees depend heavily on the wording of their terms of business. There are some proactive steps you can take as both a client and an agency to avoid potential disputes. 

Some practical tips include the following:

Clients

  • Have a proper relationship with an established recruitment agency. Find one you like and stick to it! Having a go-to agency can remove the “fee-fight” problem from ever emerging in your company’s hiring process.
  • Take care to study the recruitment agent’s terms of business. Be clear about which contract you are following. Ask for clarification if anything does not seem clear. Get the explanation in writing.
  • Maintain good organisation with emails and notes on any potential candidate CV’s. Have dates for all decisions. Any small piece of information may help if a dispute arises subsequently.
  • At any indication of a potential fee-fight, take immediate action. Assess the situation and determine who is responsible for delivering the hire – cut off the other agency completely. 
  • Determine how long after the initial introduction fees are payable to avoid the back-door hire dispute.

Agencies

  • Establish a client relationship before you spam a company with irrelevant candidates.
  • Be clear about your terms of business. Have a clearly defined and signed contract which includes “payable fee” end date. Working with a business lawyer to go through your terms and conditions of business is often worth the little upfront time and money.
  • Do not be too aggressive with your client. Your opinion of whom the company should hire is not relevant. Client-company relationships are vital. 
  • Maintain a proper professional working relationship with the client first. Listen to their needs and what they are aiming to achieve with their new employee. Do not send speculative CVs.
  • Consider specialising in a specific field. Working for companies in multiple areas makes it difficult to establish a specialised base.

The process of disputing a recruitment agency fee is highly variable based on the situation. There is no one-size-fits-all solution. Going to court should always be considered a last resort, as costs of court often outweigh any settlement.

Action plan

Fee disputes often end in some form of compromise or settlement, and getting an early start is essential in resolving the matter efficiently. If you are a client being told to pay an unnecessary fee or a company who deserves compensation, get in touch with one of our employment solicitors today!

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