Does the one who pays the piper really call the tune?

With introduction fees often being the crux of recruitment, Colin Cottell looks into the disputes and problems with who actually owns a candidate’s CV

If fees are the lifeblood of recruitment, it is unsurprising that the question of who owns the candidate, and is therefore entitled to that fee, is often a matter of dispute. “That’s a $60m question and one that we are asked all the time,” says Kevin Barrow, a partner at Blake Lapthorn.

Mike Cooper, a director of national driver and industrial recruiter Best Connection, says there have been several instances where other agencies, who after winning a contract, tried to takeover his agency’s existing temporary workforce without paying Best Connection the fee due. This fee is applicable where there is a gap of less than eight weeks from when the temporary worker last worked for a client, in line with the Conduct Regulations 2003, he explains.

Maxine Waring, managing consultant at multi-sector recruiter Wote Street, says there was “much table banging” after two high-street agencies in Basingstoke disputed who should be entitled to an introduction fee.

The dispute arose when a temp placed by one agency was subsequently placed by another agency into another department in the same company. “The original agency argued that the client wouldn’t have know about the candidate if they hadn’t put the candidate forward first,” she explains.

“Introduction fees are the whole crux of recruitment,” she says. And with around 90 agencies in Basingstoke alone, and “40 to 45% of candidates registering with more than one agency”, the potential for such disputes is high, she adds.

Andrew Groves: The issue of CV ownership has long been a bugbear to a lot of in-house teams

Andrew Groves: The issue of CV ownership has long been a bugbear to a lot of in-house teams

John Miller, operations director of Nforce Business Protection, says that last year, when working for a large technical recruiter, he had to threaten legal action against another agency after submitting the CV of a candidate to a client, who was subsequently placed.

Miller, who collects compensation on behalf of agencies where clients breach their [agencies’] terms of business, says the other agency argued that as the master vendor the candidate couldn’t be placed by any other agency.

According to Blake Lapthorn’s Barrow, “a real area of dispute” is where recruiters are asked to sign up to new conditions of supply, either by end users or by managed service providers.

Barrow says these often specify that recruiters “are entitled to an introduction fee if they hire a candidate within a certain period [often six or 12 months], they have the right to keep them on their database for ever afterwards and not pay the agency a sausage”. In addition, with the growing popularity of social networking sites as a way of sourcing candidates, there is an increased risk that employers could effectively bypass recruiters, he suggests.

This issue came in for a public airing at an Association of Professional Staffing Companies (APSCo) meeting, when Katie McNab, recruitment manager of PepsiCo, one of a panel of in-house resourcers, told the audience of recruiters: “If we have already got a candidate on our radar, then I am not going to pay an agency for it.”

Maxine Waring: I would rather spend more energy in finding a different job to fill then arguing over one CV

Maxine Waring: I would rather spend more energy in finding a different job to fill then arguing over one CV

Andrew Groves, head of national resourcing at Yell Group, says that with many agencies sending in CVs, very often unsolicited, for the same candidate, the issue of CV ownership has long been “a bugbear to a lot of in-house teams”.

He says that recruiters have gone to extreme lengths to ensure that their agency is the one to get ownership by sending CVs with terms and conditions attached. “Legally we accept their terms and conditions by opening the CV,” he explains. In the rush to be first, they very often neglect to interview candidates, he complains.

To get round, this Groves has taken several steps in his various resourcing jobs, including insisting that agencies sign his terms and conditions rather than the other way round. Among those terms are that the recruiter must have spoken to candidates first. Any recruiter that failed to do so would nullify Groves’ terms, so even if their CV arrived first they wouldn’t get ownership. For those who don’t like this approach, Groves’ message is an uncompromising one: “They signed up to our terms - it’s just tough.”

Colin Gerstein, chief executive of executive search firm QPS Group, is similarly uncompromising. “If a client has acknowledged receipt of a CV - in effect saying they have read it - that’s the beginning and the end of it,” he says. And while he appreciates that sometimes another agency may have contacted the client to discuss the candidate, for example, he is adamant that his firm, as the first to have its CV acknowledged, should get any subsequent fee.

Gerstein says that to minimise the risk of losing out he “drums it into his people on an almost weekly basis” to send the company’s terms of business with each and every CV.

While candidate ownership can undoubtedly be a source of tension, there are ways to lessen the risk of this escalating into a fullblown legal dispute

Mike Cooper: There have been several instances where other agencies tried to takeover my agency’s existing temporary workforce without paying Best Connection the fee due

Mike Cooper: There have been several instances where other agencies tried to takeover my agency’s existing temporary workforce without paying Best Connection the fee due

While candidate ownership can undoubtedly be a source of tension, both between recruiters and between recruiters and employers, in practice there are ways to lessen the risk of this escalating into a full-blown legal dispute. Though it may not be strictly legally correct (see What the law says, below, many staffing businesses and clients take the view that the first recruiter to send in the CV of a particular candidate has ownership. Waring says that this can work well, particularly when clients date stamp CVs, providing a record of when they receive them.

Sometimes it is best to compromise, suggests Gerstein. For example, he agreed a split fee with another agency where, though his agency was first, the candidate preferred to work with the other agency. “Everybody was happy, including the client who only had to pay one fee,” says Gerstein.

Cooper agrees, and says that in most cases he is prepared to waive the fee due to his agency when another agency takes over the contract -as long as his agency continues to get paid for 8-12 weeks after the contract was taken over. “We wouldn’t want the client to suffer or for the temp to lose their job,” he says.

Arguing over who owns the candidate can be seen as petulant by clients, warns Waring. “I would rather spend more energy in finding a different job to fill then arguing over one CV,” she asserts.

With recruiters competing harder than ever to get their candidates in front of employers, candidates registering with several agencies as they desperately seek work, and social networking sites increasing in popularity, the issue of who owns candidates is unlikely to disappear any time soon.

But by building better relationships and communicating effectively with clients, and by compromising with fellow recruiters, recruiters can play their part to ensure that the majority of disputes are resolved.

power points

  • Always send clients your terms of business with each CV
  • If you don’t trust a client not to contact a candidate, strip out vital information such as contact numbers
  • Ask your client what their policy is on duplicate CVs: do they have a system for logging receipt of CVs?
  • Spend time interviewing your candidates, then when a job comes in you can send the CV straight away
  • If another agency ‘unjustly’ gets representation over a candidate, speak to the agency, possibly agree a split fee rather than enter into a costly legal dispute
  • Don’t send in unsolicited CVs — it’s not appreciated,” says Groves

What the law says

There is little case law on who is entitled to a placement fee when more than one recruiter ‘introduces’ that candidate to a particular employer.
According to Kevin Barrow, a partner at Blake Lapthorn, the courts have made their decisions on the basis of who was deemed to have been ‘the effective cause’ of the introduction.

One helpful case involved two estate agencies in 2008. The first, Foxtons failed to sell a property to a Mrs Low. However, after the property was
remarketed, a second estate agency, Hamptons, sold the property to Mrs Low. Foxtons then began proceedings to (unsuccessfully) recover the fee to which it claimed it was entitled.

“One might speculate that the courts will in future apply this to hold that a recruitment agent can only recover commission if he introduces an
applicant who becomes engaged by the client as a result of the introduction,” said Barrow.

“It is clear that, following this judgement, recruitment agencies who fire out speculative CVs will not be able quite so easily to argue that they were the ‘introducers’.”

 

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