Last week, I had the wonderful opportunity to contribute on a discussion panel with recruitment luminaries, Ross Clennett and Fiona Harland. We were discussing Restraints of Trade (RoT) in recruitment, and recognised that a RoT could be regarded as any impediment to a person’s freedom to carry on a trade or profession, to find or obtain work, or to arrange their workforce as they wish.

In that context, we began to examine the common practices of charging temp-to-perm (T2P) fees and of imposing restraints on clients and work seekers restricting direct engagement.

The RoT potential of T2P fees has long been recognised by the courts.[i]  Likewise, the courts have recognised the direct and indirect RoT effects of no-direct-engagement provisions.[ii]

In our discussion, we started to examine the transparency of these provisions in some of the cases we were considering.

Could the worker in Earth Force Personnel, for example, have known that his labour hire agency was going to charge the host/hirer $7,500 if he obtained a job directly with the host/hirer … in any capacity… of any duration … ever? Could he have been aware of the impact which that provision would have on his future employability?

Could Woolworths, in Informax International v Clarius, have known that the 12-month no-direct-engagement provision in its contract for the acquisition of labour hire services was protecting the providers’ interest in a 6-month restraint imposed on the contractor?   

Could the contractor, who was bound directly by an express  6-month restraint in her contract, have been aware of the indirect effect that the corresponding 12-month restraint imposed on Woolworths would have on her future employability? Or that the misaligned restraints had different start points?

All of this starts to raise issues of recruitment ethics and professional conduct. How are you dealing with these questions?  Is there a case for greater transparency on the part of recruiters?

Should recruiters be required to disclose to clients the nature of the restraints imposed on work seekers; and to work seekers, the nature and effect upon employability of the restraints imposed on clients?

What do you think?

Andrew C. Wood

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[i] Earth Force Personnel Pty Ltd v EA Negri Pty Ltd [2010] VSC 426

[ii] Informax International Pty Ltd v Clarius Group Limited [2011] FCA 183