What Is a Placement Agreement?
Hiring new employees requires significant contractual documentation. For this, the employer should create a job description and then find the candidate that matches the description the best. On the basis of that shortlisting, prospective hires are selected, compensation is discussed, along with other miscellaneous details and then a placement contract is given.
Sometimes, companies may hire third party contractors for selecting a list of potential candidates through a private placement agreement. After finalizing the candidates’ list, the third party agency to whom the process has been outsourced will issue a placement agreement for confirmation
When Do You Need a Placement Agreement?
This agreement is drafted between a recruiting agency and a prospective hire. The purpose of the agreement is that the recruiting agency would conduct all the relevant tests and training so that companies in the future may recruit them. Companies might need this agreements when they don’t have the technical expertise to conduct the hiring process. Sometimes, companies don’t want to dedicate the time and resources for hiring people. In those cases, they communicate the requirements to a third party agency and outsource the responsibility to them with a placement agent agreement. So these third parties hire people, train them, and retain them under its roster so that when companies want, in the future, they can select them
Inclusions in Placement Agreement
A standard placement agreement template includes the following terms
- Details of the training program that would be conducted to the candidate
- Details of both the parties
- Rights and responsibilities of both parties
- Responsibilities of the agency after the candidate is selected by a company
- Waiver of guarantee of employment by the agency
- Application fee for the agency and the refundable status
- Application process to enroll the candidate on its rosters
- Providing necessary information
- Responsibilities of the employee upon being selected by a company
- Communication of receipt of employment offer
- Restrictions on contacting employers for job offers
- Relationship between the agency and the candidate
- Termination of the agreement
How to Draft a Placement Agreement?
Some important points that are required when drafting an agreement are
- That the employee understands his relationship with the agency
- That the candidate understands that he should be trained before sending him to the company
- That the candidate is obligated to appear for interviews if a job offer is received
- That the candidate understands that this is an agreement of exclusivity
- That the candidate understands that the agency does not guarantee employment
- That the relationship is for as long as the company employs him
- That the candidate is not employed by the agency, but only has a contractual relationship with the candidate.
Benefits of the Placement Agreement
Some benefits are
- It ensures that the candidate finds a job
- It waives the liability on the agency for finding the candidate a job
- It ensures that the candidate stays with the agency in an exclusivity contract
- It ensures that the training that the agency puts on him does not go to waste
- It ensures that the candidate is not selected through a rival agency
- It creates a mutually beneficial relationship for the candidate and the agency
Key Terms/Clauses in Placement Agreement
Some key terms in the agreement are
- Waiver of guarantee
- Obligation of attending interviews
- Non-employment relationship
- Communication of changes in the candidate-employer relationship
What Happens in Case of Violation?
Agreements usually contain provisions that outline how breaches of contract are to be dealt with. If there is a breach of contract here, then the agreement is terminated immediately. In most cases, agencies don’t look for remedial measures to continue the agreement. The candidate may be asked for a penalty. If a candidate absconds, then the agency can’t take any action against him. However, for any other breach such as not attending interviews, not communicating offers, or working with other agencies as well can attract penalties for the agency. If the breach is substantial and the loss is severe, the agency may file a suit against the candidate
These forms of agreements benefit the candidates and companies the most. Recruiting agencies in between act as moderators to fulfill a gap in the demand and supply.
[ Also Read: Placement Agent Agreement ]
Sample for Placement Agreement
A sample of the agreement can be downloaded from below.