In an interesting case (First Personnel Services Limited v Halfords Limited) decided at the end of 2016, a client terminated the services of a recruitment agency with which it had dealt over many years and appointed a new recruitment agency. In consequence the employment of a number of temporary workers provided by the agency involved in supplying services to the client was transferred to the new agency by operation of the UK's Transfer of Undertakings (Protection of employment) Regulations ("TUPE"). Against this background, the first agency succeeded in a claim that its terms of business with its (now former) client entitled it to an introduction fee in respect the workers concerned.
The TUPE Regulations do not, of course, apply in the Isle of Man. However, it is by no means uncommon in tendering and re-tendering projects in which services may continue to be performed by the same personnel, to require that, in case of a change of provider, the successful tenderer offers employment to the personnel in question on terms comparable with those applied by the previous provider. In this event the personnel involved may enjoy continuity of employment by operation of the Employment Act 2006.
Should these circumstances arise; two lessons can be learned from the First Personnel decision.
First, if the terms of business of the previous provider are to entitle it to recover transfer or introduction fees from the client, the language used should be clear and effective: in the First Personnel case, the language used was open to serious criticism, the case itself spanned a considerable period and the hearing occupied some 11 days, with the result that the costs of the claim will have had an impact upon the eventual recovery.
Second, a client considering the engagement of an agency providing services in succession to a previous provider of personnel who may continue to be involved in the supply of the services in question should check whether a liability to introduction or transfer fees is likely to arise and, if so, to seek an indemnity against them.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.