Employment and recruitment agencies must protect themselves against legal liability for accidents that occur whilst placing temporary workers.
Experts at insurance broker Jardine Lloyd Thompson say members of the Recruitment and Employment Confederation must, from the outset, clearly state which party is liable if a claim is made.
Where standard REC terms of business are used your exposure will be limited, as these contract conditions should deflect claims back to the hirer or employer of the worker.
Gary Chambers, Regional Managing Director of Professional Risks for JLT, said:
“It has always been my recommendation that members use the services offered by the REC to set up their standard terms of business contracts”.
“The act of signing non-standard contracts without considering the insurance implications could leave your business seriously exposed.
“Often these contracts can make you liable for losses which are either caused or suffered by a temporary worker, and you will need to arrange cover for Employers and Public Liability to cover the specific contract terms”.
JLT would advise that you consider the following prior to signing any non-standard contracts:
Make sure that all non standard contracts are forwarded to your broker if your policy terms and conditions insist that this is necessary.
Even if this is not the case, your broker should give you clear guidance on the insurance clauses and advise you on any possible differences between the contract requirements and your existing insurance cover.
Insurance brokers are not qualified legal advisors and can only compare the contracts liability clauses against your insurance cover, so it is always recommended that you seek professional legal advice on any contractual agreements.
Insurers use statements such as “the non standard contract is covered, subject to your standard policy terms and conditions”. Beware, this probably means that you are only being given cover based on your existing policy wording, and any contractual obligations with regards to insurance may be excluded, leaving your business to foot the bill.
Contractual liability cover can extend your insurances for Employers and Public Liability to include legal liability assumed under contract. The extent of the cover provided by each insurer will vary, and it is recommended that you speak to your broker to discuss any limitations.
Gary added: “We are all aware of the current financial situation. The everyday pressures of running a business are more than enough without being left uninsured and fighting expensive legal battles.”