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Risk & Responsibility in Recruitment

Updated: Aug 16, 2022

If you aren’t sure of your legal responsibilities as a recruiter, or if you are tired of carrying the risk for clients and contractors, this is for you. Darren talked through risk and responsibility in recruitment with Martin Richardson of Ready Set Recruit, a lawyer that focuses on our industry.

What does PlatinumWFM’s back office solution have in common with Ready Set Recruit’s TOBs Toolkits? Both are tools to help protect your agency against nasty legal surprises and make it as easy as possible for you to keep up with your responsibilities.

If you recruit and manage contractors (also called staffing or on-hiring staff), you have specific legal obligations. On-hiring is not the same transactional business model as permanent recruitment as it is regulated by laws governing employment, workplace safety, taxation and labour-hire licensing.

Despite those PSA’s your clients expect you to sign, you’re not an insurer for risks in their businesses, so let’s unpack your actual liabilities and how we can help you manage them.

Cross your T’s, dot your i’s

The excellent revenue in recruiting and managing contractors comes with some risks, but these can be minimised in your back office processes and by using quality legal documents.

We know you’re not a lawyer, anymore than you’re a software techie. We understand that it’s tempting to use that old legal document template that’s been floating around for years, just as it seems easier to use a different software solution for each step in your back office process. But, we don’t want you to find out the hard way that this approach to legal documents and software has put your business at risk.

When it comes to compliance and governance, PlatinumWFM’s back office automates as much as possible to reduce human error and tick off your reporting and governance obligations as money flows through your business. We make this possible because our solution integrates the leading software into one seamless back office that’s specifically tailored for recruiters.

Similarly, Ready Set Recruit’s tailored legal documents and toolkits are especially designed to meet the needs of recruiters. ‘Tailored’ means the documents are created by a lawyer with a working knowledge of recruitment and staffing. Remember that a legal document is a product, just like software. You need the right product for your business, one that you understand and use effectively. When you put your TOBs in front of a client, you want to be able to answer questions confidently and push back on changes as necessary.

Martin Richardson, Founder, Ready Set Recruit says, “Your TOBs need to reflect your service delivery risk - your service is not what your contractors ‘do’ for a client,” says Martin. “Take a tech agency that supplies a developer – is the agency the specialist I.T. consultant who can sign off on software deliverables? Definitely, not! I see too many contracts and TOBs that get this fundamental principle wrong and leave agencies carrying service delivery risk and becoming their client’s default insurer.”

Getting Paid

This is one of the biggest risks recruiters face. Often, you need to pay your contractors before your clients pay you, and if you are over-exposed to one client, this can devastate your cash flow (we addressed over exposure in Risk & Reward in Recruitment.

PlatinumWFM’s back office process ensures that clients receive an invoice based on approved timesheets. Our Care Team actively chases contractors to submit their timesheets and then follows up on client approvals. The instant the approvals are done, our system issues the invoice. Once the client has their invoice, getting paid usually comes down to your TOBs.

Ready Set Recruit has this great advice for getting paid how and when you expect to:

  1. Put an agreement in place with enforceable legal terms, including the ability to charge interest on overdue accounts. It’s a stick when you need it.

  2. Make sure your clients know what you do to get paid. The more clearly you communicate your payment terms and expectations the better.

  3. Agree your TOBs upfront, even if you feel uncomfortable talking about fees and terms. Burying them in emails, or sending them after the deal is done, can cause enforceability issues down the track.

  4. If you ever need to ‘go legal’, having clear terms in places reduces the wrangling.

Compliance to-do list

Let’s tackle some of those issues that lead to nasty legal surprises, because if you don’t tackle this compliance to-do list, you’re building your business on quicksand.

Accurate governance and reporting is absolutely critical in our industry. If you recruit and manage high end contractors, then you need good governance and reporting built into your back office. This is the simplest way to minimise your risk.

At PlatinumWFM, we believe that software should make your life easier, especially when it keeps your business in good standing with the ATO. Our solution connects timesheets and invoices, to payroll and direct payment of PAYG, to Super clearing house management and State payroll tax reporting. This ticks off the major reporting and governance items on your compliance to-do list.

The Ready Set Recruit team knows how stressful it can be to deal with lawyers, especially if they don’t understand recruitment. Legal doesn’t need to be hard. Depending on what you’re comfortable with, you can use the DIY toolkits or guided toolkits or fully customised documents, it’s entirely up to you.

There are only two issues that PlatinumWFM and Ready Set Recruit can’t solve for you. First, you need adequate insurance in place that covers recruiting and managing contractors. Second, you need a labour hire licence and employment agent licence if you do this kind of work in Victoria, Queensland, ACT, or South Australia.

Disclosure and invitation

Please be aware that the advice and information in this article is general only and has been prepared without taking into account your particular circumstances and needs. To book a free consultation to talk about your specific needs, click here for Darren and here for Martin.


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