The past 12 months have seen a sharp increase in the number of disputes over recruitment agency fees, according to an expert in employment law.
Menzies Law, based in Bristol, has over many years advised businesses in dispute over recruitment fees, and has noticed around a 25% increase in these cases over the last year. Luke Menzies, Solicitor, Barrister and Owner of Menzies Law, said he believed it was due to two main reasons.
“The first reason, which our clients tell us, is that as recruitment becomes more difficult, by which I mean firms are struggling to find good candidates for their vacancies, most companies are using more than one agency or recruitment consultant to fill a single role.
“Secondly, the recruitment sector has become increasingly competitive, and in some cases, we have seen some rather aggressive sales techniques, contracts and terms to bind clients.”
Luke added: “At Menzies, we’ve seen it from the employer and client’s point of view, and also from that of the first agency who introduced a candidate and from the second agency’s side too. It’s clear that this is an area of frequent dispute and it’s well worth all those in, and who work with, the recruitment industry being fully aware of the issues and how to both avoid them and to strengthen their position should a dispute arise.”
There are two particularly common scenarios that can spark a recruitment dispute. The first is the so-called ‘back-door’ hire, where a recruitment agency introduces a candidate to a client, the candidate is not hired at the time, but later on (usually a few months later) the hire does take place by direct contact between the client and the candidate, usually without the recruitment agency being aware until afterwards. It then wants to claim its fee because its terms of business state that the fee is due if the candidate is hired by the client for any reason within a certain period following the introduction.
The other common scenario is what could be referred to as ‘fee fight’, where agency 1 introduces a candidate but no hire takes place. Later – sometimes days, sometimes months – agency 2 introduces the same candidate to the same client and the hire takes place. Agency 2 asks for its fee and invariably it is paid. Agency 1 then gets to hear about the hire and demands its fee too, because its terms of business have the same sort of term as mentioned above.
Luke continued: “We’ve advised agencies and employers alike, and what I can say with confidence is that each case – and therefore the likely legal outcome – is different, each time. Employers quite rightly don’t want to have to pay fees that aren’t legitimately due, but at the same time each candidate has an understandable value to a recruitment agency and it’s reasonable for the agencies to want to take certain steps to protect themselves.”