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Health and social care sector recruitment: insurance risks

As a recruiter working in the health and social care sector, you’re presented with a range of unique risks and challenges. Recruitment can be complex, particularly when it comes to contractual aspects that can cause issues with insurance cover. So it’s worth bearing these potential issues in mind:

Local authority or RPO (recruitment process outsourcers) contracts

When local authorities don’t have sufficient staff to deliver a home care service for the elderly or infirm, they outsource work to recruitment agencies or RPOs. If the RPOs have a shortfall in supply themselves, they may, in turn, outsource to smaller recruiters.

In this case, the local authority and the RPO will agree on a contract, then between the RPO and the smaller recruiter, the risk of liability will be passed on. However, the hiring company may insist on higher limits of indemnity from all parties.

Notifying insurers

When recruiters supply workers under their own terms and conditions, it could mean refusing to accept liability for the actions of the workers provided. This lower risk will be reflected in the cost of premiums.

However, if the recruiter delivers the end service to the hirer, they are becoming a sub-contractor. This means they will have a greater degree of responsibility under the contract. Failure to notify an insurer of a change in arrangements could result in a claim being declined.

Extending cover and increasing indemnity limit

Notifying an insurer of different contract terms and conditions means they can amend the policy to include additional risk. Some local authorities may also insist on higher indemnity limits. Both will impact the cost of premiums, creating an extra fee for the recruiter to consider when pricing up the hourly rate.

Vicarious liability: why should you have it?

A recruiter may begin with a policy that protects against the risk of supplying the wrong candidate or other types of error when paying the worker. If a contract states a recruiter is responsible for negligent acts of the contractor, the recruiter could suffer financially. However, a policy including vicarious liability ensures cover if the agency becomes legally liable. So it’s worth considering as part of your cover.

Contractual liability: is it covered?

Suppose a recruiter is responsible for a loss due to signing a non-standard contract. In that case, some insurers may refuse to cover. There is often exclusion of contractual risks. It’s important to check with your broker or insurer if there are any contractual liability exclusions in your policy. You may not have the cover you think you do.

Delivery of the service

It’s worth bearing in mind the difference between supplying people and delivering the service. Supplying people on a ‘labour only’ basis minimises risk because workers are instructed what to do by the hirers. If the recruiter becomes liable for delivering a service, there may be more significant risks attached. Should a recruiter be directly responsible, they could even face penalties for providing faulty work or failing time scales.

Make sure you discuss your needs with your broker to arrange the right type of cover for your business.

If you’d like to talk about any of the points raised here, please get in touch with our team of insurance experts. Call 0113 3508712 or request a callback here.

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