A Recruitment Agreement is an agreement between the Recruiter and the “Client” company to identify and present qualified candidates to work with the Client. In exchange, the Client pays the Recruiter a fee for the service.
When business owners are too busy to hire the qualified employees they need themselves, that’s where Recruiters come into play.
A Recruiter can be a huge help when everything goes perfectly and they find the perfect candidate for you.
However, there are a lot of ways that a Recruiter can hurt your business if you aren’t careful.
A shady recruiter or client can cost you a lot of time and money.
One of the best ways to protect yourself is by having a solid Recruitment Agreement in place before starting the service.
As a contract lawyer, I’ve drafted and reviewed hundreds of contracts including Recruitment Agreements, and I can definitely help you get yours drafted or reviewed.
Email me at firstname.lastname@example.org to get help with your Recruitment Agreement.
What Does a Recruitment Agreement Do?
A Recruitment Agreement outlines the duties and responsibilities of a relationship where the Recruiter (or Recruiting Firm) is hired by a company to identify qualified candidates to fill the company’s job openings.
These agreements can vary in their length and scope, but they all aim to protect both parties and clearly define each of their roles. Your company is paying a Recruiter to do something really important, choosing the right person to work for your business and help your business grow.
You should use a Recruitment Agreement if you would like to hire a Recruiter or Recruiting firm to find qualified candidates to fill a position at your company.
This is a great option for busy companies who don’t have hours to spend looking through hundreds of resumes and want an expert’s help getting it right on the first try.
If you need help drafting a Recruitment Agreement, email me today at email@example.com.
Why Do I Need a Recruitment Agreement?
You need a Recruitment Agreement to protect your company’s best interests.
Just like hiring an employee, hiring a Recruiter comes with its own set of pros and cons.
What if the Recruiter takes your money and disappears without giving you any candidates?
What if the Recruiter gives away confidential company information?
What if all the candidates your Recruiter presents are unqualified?
These are just a few of the scenarios that you can face when you hire a Recruiter. If you have a Recruitment Agreement in place, you’re protecting your business from these possibilities.
What Should Be in a Recruitment Agreement?
Your Recruitment Agreement should clearly define the parties and their rights and responsibilities.
Here is a shortlist of things to include in your Recruitment Agreement:
- Who both parties are.
- What the scope of the Recruiter’s duties is.
- How you will pay the Recruiter.
- How to handle terminating and replacing a candidate.
- How to terminate the agreement.
- A privacy agreement.
- A conflict resolution clause.
This is just a shortlist of things to consider including in your Recruitment Agreement. Other things to think about are industry-specific qualifications for candidates and any local employment laws.
Ask a qualified business lawyer today about what to include and not include in a Recruitment Agreement.
Email me now at firstname.lastname@example.org so we can go over in detail what your business should include in its Recruitment Agreement.
Recruitment Agreement Termination
It’s important to specify how either party can terminate the Recruitment Agreement contract.
Either party should be able to terminate the Recruitment Agreement at any time with the proper amount of notice. You do not want to be forced to use a Recruiter that is no longer giving you results, and your Recruiter is a contractor who might quit and having a quit notice gives you time to find a new Recruiter.
A few important things to include in your termination clause:
- How much notice either party has to provide to terminate the Recruitment Agreement.
- What reasons a party can terminate the Recruitment Agreement.
- How to handle the final payment.
- How to handle disputes that arise after the agreement is terminated.
- A clause specifying that all privacy and NDA agreements still are in effect.
What to Do if You Need to Replace a Candidate
Sometimes, a candidate that a Recruiter presents you is not suitable. When this happens, you need to have a plan in the Recruitment Agreement for how to handle this.
If you need to replace a candidate, there could be a number of reasons that either fall under your company’s fault, the Recruiter’s fault, or the candidate’s fault. Each of these has different implications for both parties and will require actions for either of the parties.
In the instance that a candidate needs replacing because the Recruiter failed to do their due diligence, then they should find another at a free or reduced rate and should also be responsible for paying that employee’s unemployment if applicable.
Retainer Fee Structure vs Contingency Fee Structure
A retainer fee is a flat fee each month for the Recruiter’s services and a contingency fee is a percentage of each successful candidate’s salary.
When deciding how to pay your Recruiter, it’s tempting to go right to pay a contingency fee. After all, that means you only have to pay them for results which is great, right?
However, if you are going to use a Recruiter to search for a high number of employees, you might consider using a retainer fee structure. This will save you thousands in the long run as your costs don’t go up for each employee hired.
Do you have a question about which fee structure is better for your business?
Email me now at email@example.com
Dispute Resolution in Your Recruitment Agreement
It’s important to address Dispute Resolution in your Recruitment Agreement.
Inevitably, some kind of disagreement between you and your Recruiter will come up. It’s important to have a clause within your contract in place to protect yourself.
At a minimum, you should have an indemnification clause requiring the Recruiter to defend and indemnify you if your company suffers directly because of their actions.
Additionally, your lawyer can advise you whether you should include a provision requiring the Recruiter to agree to waive their right to a jury trial in the event of a disagreement.
Can I Draft a Recruitment Agreement Myself?
You can theoretically draft a Recruitment Agreement yourself, but it is a good idea to have a lawyer draft it for you.
A Recruitment Agreement does so much more for your business than define your relationship. This is a crucial document meant to protect your company and its interests and should be handled by a qualified business lawyer.
Hiring a Recruiter is a huge help for any business, but you need a Recruitment Agreement in place to protect yourself.
How do you know what should go in a Recruitment Agreement?
Are there any specific things to watch out for depending on which state your business is in?
If you’re looking to get your Recruitment Agreement drafted or reviewed, email me at firstname.lastname@example.org
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