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It's a Question of Ethics

Posted By APSO, 18 September 2014

Attie Botes, It’s a Question of Ethics

It may be legal, but is it ethical?


Since the beginning of the year the ethics department was especially made aware of a gruelling and highly controversial issue by candidates and members alike. The issue related to certain penalty clauses contained in a client’s offer of employment and/or contracts of employment. The most common of these are penalties related to being liable for repayment of the placement fee incurred when the candidate (then an employee) leaves the employ of the client within a certain period of time.

In the example a candidate’s offer of employment and/or contract of employment will contain a clause requiring him/her to stay in the employ of the client for a certain period of time (usually 12 months but in some cases even longer), failing which the candidate will incur the liability of repaying the placement fee that the client paid to the agency who placed him/her. In principle this appears to be legal and may even be seen as a logical way for a client to “protect” its business interest for which it has arguably paid a hefty fee. There are however, in my opinion, several problems with action like this.



Firstly, most agencies provide a guarantee for their service to a client, generally around three to six months. If the candidate’s employment is terminated for any lawful reason within this guarantee period the agency will usually try to find a suitable alternative candidate, failing which a part or the whole of the fee received would be paid back to the client. In this regard the client’s contractual provisions with the candidate would be superfluous. It is important that an agency discuss this with their client, especially at the risk of losing a good candidate and having your brand associated with the client and its actions.

Additionally the candidate was not a party when the placement fee was negotiated between you and your client. He or she did not have an opportunity to partake in the negotiations of a matter that would ultimately have an impact on his or her future. Also, candidates are somewhat on the back foot when it comes to securing employment as the current job market is tough. A candidate is just so happy to have got the job and do not want to prejudice their position with their future employer in any way and might therefore be unwilling to raise this concern/issue at the outset of the relationship. Here the agency plays a significant role as mediator in matter such as these.

Lastly such a provision may amount to a naked restraint, stopping the candidate from securing any future position outside the employ of the client for the contracted period. Ten to twenty five percent of an annual gross salary is a significant amount of money for anybody to pay and this is sure to be enough to stop a candidate from seeking alternative employment, even in circumstances where they are unhappy in their position or even when their personal circumstances warrants same. This is surely not a positive situation for your client or for your agency as the word is sure to spread to stay away from such and such a company or agency.

The bottom line is that your agency’s name will inevitably be associated with your client’s and the candidates you source. Just as important as it is to source high calibre candidates the same applies to servicing your clients and making sure that they remain preferred employers for candidates. It is therefore imperative that you engage with your clients on topics such as these and make sure that they are aware of the repercussions, especially negative, of them. Educate your clients and try to find ways to develop your service offering to them in an effort to avoid scenarios like this. It will no doubt result in you becoming the “go-to” agency because of the high level of service and business solutions you can offer to clients.

Tags:  APSO  APSOgram  candidate  client  ethics  placement fee 

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