Whilst recruitment agencies generally contract on their own terms, occasionally they work with a client that insists candidates are supplied pursuant to their own terms. The client only deals with recruiters on its Preferred Supplier List ("PSL") and the recruiters on the PSL are signed up to specific PSL terms of business.
The benefit to the client is obvious. Instead of dealing with a wide range of recruiters and being subject to lots of different sets of terms of business, they can deal with all recruiters on the PSL in a uniform way. This in turn streamlines processes and costs for the client. However, this can lead to potential pitfalls for the unwary recruiter, used to dealing on its own terms.
Here are some of the key pitfalls recruitment agencies should watch out for when entering into the PSL terms:
Your terms will no longer apply
If a recruiter signs PSL terms, then the supply and subsequent hire of a candidate will be subject to those terms. Such terms typically will include a longer lead time for payment.
Redefining "Introduction"
PSL terms will generally have a narrower definition of what constitutes an introduction for the purposes of a fee being payable. Typically, PSL terms will state that an introduction is only made where the client has requested assistance with filling a vacancy (which potentially rules out fees for speculative candidates).
Exclusion of third-party Introduction fees
PSL terms may include a clause which specifically prohibits fees arising where a candidate is introduced by the client to a third party. This can be problematic where the client is part of a large corporate group and wants to move a candidate around between group companies.
Rebates and Refunds
PSL terms will have much wider powers in regard to claiming rebates and refunds for candidates that don't work out.
Entire agreement clauses
When a candidate was supplied under the recruiter's terms, but hired after signing PSL terms, what happens to the recruiter's fee if a candidate is mid-placement and then PSL terms are signed. Under what terms does the recruiter invoice? An entire agreement clause will usually state that the PSL terms supersede and replace any terms that were in place between the parties.
Using a PSL can be useful in many ways, but it is important to keep in mind the limitations they place on a recruiter's ability to be paid for its services.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
