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Top tips for recruitment businesses from a legal perspective

I’ve been asked to give my top tips for recruitment businesses from a legal perspective.

I could probably speak or blog for hours about this, but here are a few tips to help you on your way.

1 If you are agency recruiters and you use umbrella companies to facilitate candidate placements, do your due diligence on the umbrella companies. There are lots of reasons why you should check out the umbrella companies that you use, but one really important reason is to make sure that they are completely legitimate with their payments to contractors. Non-declaration of tax on income received, which some umbrella companies practice, is facilitation under the Criminal Finance Act, and you could wind up liable.

2 The next top tip is to make sure you’re on top of your Intermediaries Reporting. I’m sure you are, but I have had one client recently who wasn’t, and they have ended up with quite hefty fines.

3 The third top tip relates to a recruitment business’ own employees, and is in relation to having reasonable restrictive covenants in employment contracts. It’s really tempting to try and bind consultants to strict restrictions if they leave you, but unfortunately these will not be enforceable. They need to be long enough to protect your business, but not so long that you’re restricting the candidate from earning a living. They need to protect your client and candidate relationships; and if you feel strongly about it, they also need to protect the LinkedIn contacts that the consultant has made whilst working with you.

4 Finally, I would always strongly advise having rigid credit management, credit control and debt recovery processes in place. It’s always said that cash is king, and collecting your fee is just as important as the consultant doing a deal in the first place. So I would advise making sure that the client you doing business with has a good enough credit rating, and that you have a formula to follow if a payment is late.

by Lucy Tarrant