Published on April 23rd, 2014 | by Scott Hutchinson0
Recruiting? Remember the law of ‘Effective Cause’
In this post I discuss recruitment in relation to the law. Amazingly, there are still recruitment consultants out there who believe in the “first past the post” method of recruitment – namely that if they send a CV first, it constitutes an “introduction” and they can get a nice fee. Happily, in the eyes of the law, this is far from the case. So if you have a dispute with a recruiter, where does the law stand?
Recruitment Law is on the Side of the Quality Recruiter
Firstly, the good news is that quality recruiters, who have an excellent relationship with their clients and candidates, have nothing to fear. Commission chasers, speculative spammers and recruiters chasing jobs they have heard about but don’t necessarily have any viable connection with, are the ones who need to re-think their approach to business.
The law is very clear on this matter, irrespective of whether the same CV has come from two separate agencies.
Recruitment Law: Who is entitled to the fee?
Luke Menzies is an excellent specialist employment lawyer/barrister with Menzies Law. Here he explains the law in relation to introductions and fees:
“The law is clear that an agent will not be entitled to commission unless they are the effective cause of the candidate being hired. The employment of the candidate by the client must be a direct consequence of the agency’s actions.
“So, where more than one agent has introduced a candidate to an employer, it is not necessarily the first agent to have introduced the candidate who is entitled to the fee. For example, the client may not have had any interest in the candidate until a second agent highlighted the candidate’s strengths to the client, and ignited the client’s interest, which then led to the hire.
“Normally the agent who sets up the interview and discusses the outcome with the client can expect to be the ‘effective cause’ if a hire then takes place, but every case of competing agents needs to be analysed on its particular facts. The fee will always be due to the agent whose actions are most responsible for the hire taking place.
“The ‘effective cause’ test also applies where only one agent introduces the candidate to the client, but the client then claims to have hired the candidate for other reasons. For example, the client already knew the candidate by other means, or the client didn’t have sufficient interest in the candidate when introduced by the agent, but subsequently became interested in him or her by means other than any action on the part of the agent – e.g. several months after the introduction, which got nowhere at the time, the client then met the candidate at a conference and they developed a good relationship through their own interactions that led to an offer of employment.
“The ‘effective cause’ rule of law will normally override any terms of business in an agent’s contractual terms. There would have to be very clear and strong conditions to the contrary in an agent’s terms of business if they were to be able to successfully argue that their right to the fee takes precedence over another agent if the other was judged to be the effective cause of the hire.”
I really like this aspect of recruitment law and if you are a client about to hire people using agencies or interim providers, so should you. It should certainly save you from any arguments and unnecessary fees being paid.
Have you ever used the ‘effective cause’ element of the law to settle an issue; or have you used any other aspect of recruitment law to make your case? Do you feel the law in relation to recruitment is balanced, or should be expanded? Your opinions and your thoughts are valued. Please comment below.