What is a Staffing Agency Contract? What is It Used for?

Staffing Agency Contracts are created to describe the agreed-upon terms associated with the staffing services being provided.

By accepting this agreement, all signers are likely to share the same set of expectations. Whether a staffing agency is providing full-time, part-time, or temporary staff for an employer, creating documentation of your engagement is key.

For the better part of the past hundred years, staffing agencies have offered companies of all sizes an option to deviate from traditional, in-house hiring and employment practices.

Although these agencies have grown and scaled over time to better fit the growing demands of the business world, their prevailing philosophy has stayed relatively consistent—to offer a wide range of businesses an army of quality laborers who are available to work on a temporary, seasonal, or temp-to-hire basis.

However, the primary objective of staffing agencies is to match qualified candidates with clients eager to fill employee positions.

Traditionally speaking, these specialized job agencies were created in order to provide large businesses with a large volume of talent, but many have evolved to include temp-to-hire and, in some cases, full-time position placements.

In those situations, the staffing agency acts as a de facto, contracted human resources department, managing the hiring of the client’s short-term and long-term workers.

In addition to placement, background checks, drug testing, reference screening; skills training are conducted by temp agencies, particularly the larger, more all-inclusive firms.

Since the agency’s contract is on the line if it doesn’t deliver reliable talent, clients see this as an added advantage that could lead to boosted productivity, particularly in the short term. It is not all roses though:

One of the primary setbacks companies find in working with staffing agencies is that time-to-fill rates can be exceedingly long, making it an inconvenient (if not entirely unrealistic) solution for companies that steadily have to fill shifts or secure qualified talent on short notice.

Have it in mind that any agency operator deciding not to make a Staffing Contract can anticipate some issues, including questions about timing and uncertainty about fees.

It is also important to note that the agencies don’t just provide financial stability; they are also on the hook when it comes to physical safety as well.

For example, if a worker is placed at a factory, it is the responsibility of the agency to ensure that the work environment is suitable.

How to Navigate a Staffing Agency Contract

Making a Staffing Agency Contract will be helpful to you because it helps to ensure that all roles and responsibilities are understood by all, and there are no surprises about how long the engagement will last, and there is no confusion about compensation.

Howbeit, to properly understand the content of a staffing agency contract and make a reasonable decision, here are key points to note;

1. Understand The Industry Specific Terms

Dealing with a staffing agency means you must become informed about the field. Understanding industry-specific terminologies will let you ask crucial questions before signing the dotted line.

• Terms specific to the staffing industry include direct hire, temporary, temp-to-perm, and assigned employee.
• Direct hire is when the agency finds an individual to fill a permanent position.
• Temporary involves filling a position that involves a specific time period.
• Temp-to-perm involves placing an individual on a temporary basis, with the possibility of being hired as a permanent employee.
• Assigned employee is the term used for any individual the agency fills your open position with.
• Contacting a sales consultant who is specially trained in understanding staffing agency contracts can be your key to success to help your firm expand.

2. Understand The Agency’s Duties And Responsibilities

Have it in mind that staffing agencies can provide a wide range of hiring options to satisfy many businesses. Do you need a temporary agency to provide you with extra personnel to work on a special project?

Do you need an employee, but are hesitant to hire one without testing her out first? If so, you may need an agency that does temporary-to-hire staffing.

• Extensively understand what services the staffing agency will offer. Will they pay the employee’s payroll taxes or expect you to do this? Did they require the employee to sign a confidentiality agreement to protect you? Or, do they expect you to do that?

3. Know What Is Expected Of You

Remember that even clients have certain duties and responsibilities as well, as specified in the contract. Duties may include providing a safe work environment, properly supervising the employee, and not changing assigned duties without first notifying the staffing agency.

• Right before signing the contract, take your time to discuss with your staffing agency professional whether there are any penalties involved. If so, what situations warrant the penalties? For example, you may be financially liable for assigning new duties to your assigned employee.

4. Understand The Rates And Fees Involved

Note that placement fees are the amount you pay for the privilege of doing business with a staffing agency. The agency is getting a new hire, going through the interview process, and referring the individual to you for final approval.

All these involve time, money, and knowledge. A placement fee can be either a percentage of the employee’s annual salary or a predetermined amount.

• Your staffing agency may have extra fees such as a hiring fee when you permanently hire a temporary employee. Be sure your contract has a clause stating what the fee will be and how it will be determined.
• Know that extra bill rates may happen when the staffing firm incurs increased or new labor costs associated with your new employee. Costs include benefits, payroll taxes, wages, and social program contributions.

5. Read The Fine Print

Although contracts can be quite daunting to go through, do not make the mistake of skimming over the fine print. As tiring as it can be, read this information with a keen eye. This is where hiring a professional can be especially helpful.

• Whenever you do not understand information, ask the staffing agency and if the answer you get is not satisfactory, find another staffing agency. There is no such thing as a stupid question.
• If something is not the way you want, tell your staffing agency professional that you want your attorney to look over the contract. A reputable staffing agency will have no problem with this request.
• Fine print is where you will find additional financial information that can make or break your business relationship.
• Entering into a staffing agency contract can be one of the best decisions you and your business make when hiring a new talent. If you still are uncertain about the legalities involved, hiring a sales recruiter who is specially trained in dealing with staffing agencies will keep you protected.