Ask the expert: Recruitment agencies

Q. I applied for work advertised in a newspaper. The employer confirmed my application and suggested we would talk soon. One week later the company engaged a recruitment agency and the proposed contract rate [for the job] was halved due to the agency's commission of about 50 per cent. I was forced to be represented by the agency as the employer now wants to deal only through the agency.

1. Do I have any rights in this situation?

2. Is there any regulation - or self-regulation of recruitment agencies' practices?

3. Is there an "ethical standard" - document somewhere?

The pay they are offering is now not realistic. It appears that other roles I have been forwarded for by this agency have also had hugely inflated contract rates, and almost as surely have deterred employers.

A. If you've only been confirmed as an applicant, you don't have rights to particular employment terms as these hadn't been finalised with you prior to the recruitment agency being contracted.

You don't have to deal with this agency in seeking work, generally, but an employer can decide that it will accept only staff recruited through an agency.

Employers should be offsetting the agency fee against their own internal costs of recruitment and selection, rather than against the salary of the position, however.

The reasons for using a recruitment agency include increasing the effectiveness of the employer's screening processes and getting better candidates for positions. If you had already applied and are now the agency's referral as well, the value added isn't as clear.

If the company is trying to offset recruiting expenses against your salary, this seems like a lose-lose situation. It's not obvious that they have a better applicant pool, the pay rate is being reduced to a level that you suggest will no longer attract suitable quality staff, and the position remains unfilled for the employer.

You might raise these issues with the employer, and see if they will reconsider their hiring decisions. You might also look for positions where these obstacles do not appear. Yes, there are ethical standards and a professional association for recruitment agencies, but adding a fee - usually a significant percentage of the first year's salary - on to the salary requirements for employment is neither unethical nor unusual.

The full costs for recruiting and selecting staff can easily be a third of their salary, and turnover costs for the wrong hire can be one to two years' salary. This can make the agency's fee a very good investment if they can take on all those costs and responsibilities for the organisation and provide candidates that work out well and stay with the company after being hired.

* Barrister Chris Patterson adds this advice.

The Fair Trading Act 1986 makes it illegal for an employer or recruitment agency to engage in conduct that does, or is likely to, mislead or deceive an applicant as to the availability, nature, terms or conditions, or any other matter relating to that employment.

The Employment Relations Act's definition of an employee includes "a person intending to work".

As such, the applicant is entitled to the rights and protections of an employee under the act. One of the rights is "to be dealt with in good faith".

Employment Relations Service website

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