Our #10 Rules for Recruiters to Avoid Professional Indemnity Claims!
Running a Recruitment Consultancy or Staff Agency can be a challenging and in a busy environment, it's all too easy to make a mistake which could lead to a Professional Indemnity Insurance claim.
Annoying as it may be, awareness of the rules, can help to significantly reduce your business risk.
Here are some examples of typical PI claims:
- CV Baiting - Don't risk Recruitment or Headhunters PI Claims!
- Top 8 Recruiters & Headhunters PI Claims
The Ten Commandments for Recruiters
The core basis of Recruitment Consultants Professional Indemnity Insurance is to protect your business against claims or acquisitions of professional negligence.
As an expert in your field, you have a heightened responsibility for the advice and services you provide to candidates or clients. Because of this, a breach of your duty of care can result in a claim.
Our Guide to Keep You On The Right Path:
#1 Thou shalt not steal... Intellectual Property or Copyright Infringement
- Steal is probably a tad harsh, but it's easy for a new consultant or member of your team to "borrow" text or contract wordings from a competitor, which could leave your business in hot water!
#2 Thou shalt not skimp on staff training
- When you're busy, it's tempting to drop a new starter in at the deep end. However, if they're providing advice or dealing with complex placement queries, one wrong move could land you in court.
- For example, a client calls and asks for three additional temporary placements to start on the following Monday, the team member fails to update the system correctly, and the request is lost. Your unhappy client is looking for compensation for the work which was not completed as well as additional damages.
#3 Thou shalt never say "I am NOT an Expert."
- The law dictates that, in your position as a "Consultant", any advice provided will be considered as your professional opinion. If you are asked to comment on areas outside of your expertise, you should say so and direct the client to a specialist. The most significant danger is those in your team with "some knowledge" who, in trying to do the right thing for the client, make a comment on observation which it later turns out to be incorrect and results in an expensive legal bill.
#4 Remember, Stick to the Brief and Keep it Holy!
- Recruiting is full of specialisms, and the promise of riches can sometimes tempt us to take on a project which is wide of our standard area. This is dangerous and often results in problems further down the line. Next time you receive a call to help to interview and recruit a bio-nuclear chemist, ask if you can genuinely source a candidate with the right expertise or qualifications. If you must continue, make sure your contract accurately reflects the level of work and detail you will be carrying out.
#5 Honour thy Client, Make sure they Understand Exactly What you are Doing for your Fee
- Most PI claims emanate from a dispute in the contract or breach of anticipated duties. Spending some time up-front to actively review the contractual terms with your client could save a great deal of pain, and money, further down the line. If you and your client are absolutely clear around roles and responsibilities, many professional disputes can be avoided.
#6 Thou shalt not forget to Vet Temporary Placements Thoroughly
- Professional Indemnity exposure is often heightened when dealing with temporary staff placement. Often employers have not had the opportunity to interview of screen candidates, as such, if one of your placements makes a mistake and they were deemed to be unsuitable for the role, y ou could find yourself on the receiving end of a compensation claim. This is known as vicarious liability cover and consultants dealing with temporary placement should ensure that their policy extends to protect such instances.
#7 Thou shalt not Commit the Sin of Losing Client Data
- Personal data is a hot topic, and it is widely expected that the EU will follow the USA and impose much more rigorous reporting of data loss. Currently, in the USA, even the loss of one piece of client data will constitute a data breach and need to be reported to the regulator. Data breaches can result in personal claims from individuals or damages/fines from regulatory bodies. For example, violation of PCI Compliance (Payment Card Industry) can result in penalties of up to £50,000 per incident.
#8 Thou shalt not Ignore CV Gaps or Assume Qualifications
- Another common area for claims is misrepresentation. Remember, when you adapt a CV on your own letterhead and tweak information which the employer is relying on to make their hire choice, you must be 100% confident in the details provided. This is even more important on temporary placements where additional responsibility falls back to the recruiter to carry our the reference process.
#9 Thou shalt not Act in CV Baiting
- Building up a big bank of candidates is the bedrock of any headhunter or recruiters business. However, as outlined in our full article noted above, CV baiting is frowned upon by regulators and could leave your business with a hefty fine.
#10 Thou shalt not Covet thy Neighbours Roles Without a Signed Client Instruction
- A good Consultant really understands their market and is aware of all the current recruiting within their particular area. However, another route for potential claims is discussing roles held by other recruiters with potential candidates without authority. Your team needs to be explicitly clear and avoid any misleading statements which could subsequently result in a claim.
Many of these points may seem obvious, but it's surprising how easy it is for a mistake to be made:
- Explain Terms of Business & Contracts clearly
- Remember, you and your team are "Experts."
- Make sure everyone within your Business understands the risks and their obligations