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Recruitment: Health and Social Care sector insurance risks

Working in the recruitment industry can bring certain challenges. This is especially true when looking at what risks your specialist sector may face. If you work as a recruiter within the health and social care sector, there are aspects within contracts that can cause issues with insurance cover. Here are a few that are worth bearing in mind:

Contractual liabilities when dealing with a local authority/RPO (Recruitment Process Outsourcers)

Local authorities do not always have sufficient staff to deliver a home care service for the elderly or infirm. More often, they outsource work to organisations that have more resources. This includes recruitment agencies or RPOs. Should the RPOs have a shortfall in supply themselves, they may also outsource to smaller recruiters.

Contracts will exist between the local authority and the RPO, and then between the RPO and the smaller recruiter. This will pass on the risk of liability, although the hiring company may insist on higher limits of indemnity from all parties.

Have you notified insurers?

Often a recruiter will supply workers under their own terms and conditions. This could mean refusing to accept liability for the actions of the workers supplied. Premiums will reflect this lower risk.

However, where the recruiter delivers the end service to the hirer, they are in effect becoming a sub-contractor. They will have a greater degree of responsibility under the contract. Failing to notify an insurer of a change in contracts could result in refusal to pay a claim.

Extensions of cover/ higher limit of Indemnity

If you notify insurers of any different contract terms and conditions, they can amend your policy to include additional risk. Some local authorities may also insist on higher limits of indemnity. Again, this will create an extra cost for the recruiter to take into account when pricing up the hourly rate.

Vicarious liability: why should you have it?

A recruiter may start with a policy that covers the risk of supplying the wrong candidate, or other types of error when paying the worker. Any contract insisting a recruiter is responsible for negligent acts of the contractor means the recruiter could suffer financially. If a policy includes vicarious liability, it ensures cover if the agency become legally liable. With that in mind, it’s worth considering as part of your cover.

Contractual liability, is it covered?

Should a recruiter be responsible for a loss due to signing a non-standard contract, some insurers may refuse to cover. There is often an exclusion of contractual risks. Check with your broker/insurer if they have any contractual liability exclusions in the policy. You may not have the cover you think you do.

Delivery of the service

It is worth bearing in mind the distinction between supplying people and delivering the service. By supplying people on a ‘labour only’ basis, this risk is less, as the worker is instructed what to do by the hirers. If the recruiter becomes liable for delivering a service, there may be greater risks attached. Should a recruiter be directly responsible, they could even face penalties for delivering faulty work, or failing time scales. Ensure you discuss what the right type of cover is for your business with your broker.

If you are unsure around any of these points then please get in touch with our recruitment team here at Jelf. Call 0161 245 1215 or email peter.stoll@jelfgroup.com.
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