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UK – Government to look at indemnity clauses in guidance on AWR

05 April 2011

The government has vowed to look at the issue of indemnity clauses, which shift liability for claims brought under the Agency Workers Regulations (AWR) from end users to recruiters, in the guidance notes on the AWR, according to the Association of Professional Staffing Companies (APSCo).

The Department of Business Innovation and Skills (BIS) acknowledged that indemnity clauses are a concern following representations from APSCo at a members' meeting on 31 March 2011, attended by more than 260 recruitment industry delegates.
The government published its draft guidance notes yesterday but BIS agreed at the APSCo members' meeting to look into the issue of indemnity clauses in a future draft. BIS has a couple of weeks in which to make amendments to the draft guidance notes.

APSCo explains that its members have repeatedly been asked by end users to accept liability for claims brought by agency workers under the AWR. These indemnity clauses mean that in the event that the end user does not provide the recruiter with sufficient information on temporary workers' pay and conditions, or withholds information altogether, the recruiter would still be liable for the breach of the AWR.

Ann Swain, Chief Executive of APSCo, commented "this is a real coup for APSCo. We have discussed the problem our members are facing with unfair indemnity clauses at length with BIS and they have conceded that it's a problem which they will look to address in the guidance."

"It is clearly not fair or right for the agency to have to pay for a claim under the Regulations when an end user has misinformed them about how much relevant full time staff are paid. It is encouraging that BIS is sympathetic to recruiters on this issue, though recruiters can help themselves by not signing contracts with these kinds of clauses in."

Ann Swain added "these kinds of liabilities can be uninsurable, which can make selling a recruitment business which has agreed to such terms extremely difficult. Recruiters need to be careful what they sign up to, though anything BIS can do to highlight and potentially resolve this issue will be welcome."


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