If I sign or accept client terms and conditions, do I need to notify insurers?
8 October 2012

For many years, it was an accepted industry practice that recruiters would supply labour to hirers using their own terms and conditions.  These terms were generally based on the REC “model” standard terms and conditions and in it, from an insurance perspective, the recruiter tells the hirer that he doesn’t accept responsibility for negligent acts, errors and omissions of the worker supplied.


Providing the recruiter has sourced and supplied the right person for the job, then it is up to the hirer to make sure that the agency worker is doing his job to the hirers satisfaction.

Where the hirer insists his terms and conditions are used rather than the recruiter then the hirer is looking to be “indemnified” or covered in simple English, should the agency worker cause injury or property damage, or make a mistake that costs the hirer money.  In these circumstances, the hirer will make a claim against the recruiter and the policy, if set up correctly will protect the recruiter against legal costs or damage claims made against them, where they become legally liable therefore it is important that they let insurers know at the start of the policy or at renewal what percentage of turnover is done on standard REC terms or hirers, non-standard terms.  The premium will be calculated based on the percentage mix.

Some policies still insist that cover only applies where standard REC terms have been agreed.  Be careful to notify insurers, if this changes.

Our Recruiters Choice policy doesn’t need you to refer every contract but you must discuss the fact that you do sign or agree non-standard contracts either at the start of the policy or at renewal, or at the first opportunity when you agree to work under clients terms.

Phrases to be aware of that may need you to refer contracts to insurers:-

  • Where the hirer wants to be noted as an additional insured or co-insured on the policy
  • Where the hirer wants Consequential Loss to be covered
  • Where the phrase – unlimited indemnity appears in the contract
  • Where the phrase wilful and malicious acts appears in the contact
  • Where the legal jurisdiction is other than UK or EU (ie where a claim may be brought against the recruiter)
  • Where the business services you are supplying are anything else but labour supply
  • Where the contract requires a higher limit of indemnity
  • Where the client wants you to cover the error and omission of the worker – this may require  Vicarious cover on Professional Indemnity


If you are starting to supply temporary workers as opposed to permanent workers, there could be many other issues that need reviewing apart from Liability and Professional Indemnity such as Legal Expenses, Employment Disputes and AWR.

It is important to discuss these issues with the broker to ensure the right cover is in place.
Don't rely on the umbrella company or single person Ltd company insurance policy - your name is on the contract.

The golden rule is that if you are unsure, then contact the broker and get a confirmation in writing to state that cover is in place for that contract.

Jelf Manson carries out contract vetting (from an insurance perspective) for all its clients which can assist in a contract tender situation – do not wait until the day before a contract commences as there may be a premium to pay for the higher contract risk, which will eat into your margin.

 

For more information please contact our team.

 

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