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Hiring new talent takes time, resources and a lot of patience. Often, an organisation will seek the help of recruiters to make the hiring process easier for them. After all, it can be a long search before an organisation is finally able to find the right fit.
If you like the idea of matching employees with their potential employers and have a desire to run your own company, then starting a recruitment company may be the right path for you. As eager as you may be to dive into providing recruiting services, it’s important to make sure your company is set up properly and legally protected first.
Let’s get into it below.
How Do Recruiting Companies Work?
A recruitment company cuts down on the process of sorting through potential candidates, saving businesses time and resources. At times, a recruitment company can get mixed up with a labour hire company, even though the two are very different types of companies. We’ve written about the distinction between the two in our article, Recruitment Agency vs Labour Hire: What’s The Difference?
Here’s how recruitment companies generally work: An employer contracts a recruitment company with a specific role in mind, the recruitment company then advertises the role for them and interviews potential candidates. Finally, they’ll select a few people they believe are the best fit for the role and present them to their client. From there, the employer is able to choose the person they wish to hire and in return, the recruitment agency charges the business a fee for their services.
It’s important to keep in mind, not all recruitment companies work in the exact same way. Some will charge a fee prior to finding a potential client, others will only do so if the employer decides to go with one of their candidates. Certain recruitment agencies will only work in specific industries, while others might provide their services across a broader range of spaces.
Whatever the case is with your recruitment company, it’s important to communicate how your company does things right from the start. Managing expectations is crucial if you want your company to avoid misunderstandings and potential conflicts. Having well drafted legal documents is key when it comes to this – we’ll explain the legal documents you’ll be needing for your recruitment company in detail later on, so keep reading to know more.
How To Start Your Own Recruitment Company
When starting any kind of company, the first thing you need to do is get it registered. In Australia, registering your company means you’ll need to be aware of the Australian Securities and Investments Commission, (ASIC) as they are the main regulatory body for Australian companies.
Unlike other types of business structures (for example, a sole trader business or a partnership) Setting Up A Company requires a bit more time and resources. You’ll need to follow the rules and regulations set out by ASIC, pay fees, sort out directors, shareholders and decide on your company governance. (We’ve written a more detailed guide on setting up a company here).
However, a company is the legal structure that offers the most legal protection. Therefore, if your recruitment company is a serious business endeavour, then we recommend you stick with registering a company instead of anything else.
There’s also different types of companies you can register your recruitment company as, depending on your business’s needs. For example, a B-Corp or a Dual Company Structure might be a better fit for your recruitment company. It’s best to get in touch with a legal expert when registering your company. They can talk you through your options and help get your company registered the right way.
What Do You Need To Start A Recruitment Company?
Once you’ve officially registered your company, you’ll be legally ready to start business operations. As you know, running any kind of business comes with its own set of risks. Therefore, you’ll need to take steps to identify and manage these risks.
As such, getting strong legal documents drafted is a high priority when you’re looking for ways to keep your business protected.
The right legal documents can secure things like your revenue streams, limit liabilities and communicate important matters. This leaves less room for disputes to arise, allowing the company to run its day to day operations without a hitch – which is always better for productivity.
Here’s a few legal documents you might consider getting drafted for your recruitment company.
Service Agreement
When your recruitment company agrees to find potential employees for a particular organisation, they become a client of yours. The first step to onboarding a client is to have them sign a contract. In this case it might be a Service Agreement. Presenting your clients with a service agreement is a good way to communicate the roles and responsibilities of each party, along with a few other crucial matters such as payment, termination and liabilities.
We don’t recommend only agreeing on these things verbally, as miscommunication happens more often than you might think. Having a professionally drafted service agreement with your recruitment company’s clients is a good way to ensure that the relationship between you and them stays professional and courteous.
Website Terms and Conditions
A lot of companies choose to have a business website. In fact, it’s almost considered a crucial aspect of running a modern business as it allows people to find your company, learn about it and make bookings much more conveniently.
However, what a lot of company owners tend to miss is that it’s also important to have the right legal agreements on your website. There’s a number of risks that come with being online, so you want to manage your liabilities and protect the control you have over your website. It’s also wise to have a way to let users know the rules for navigating your website.
This is where a Website Terms and Conditions comes in handy. It can protect your business as you navigate the online world and keep it secured from potential threats.
Privacy Policy
Another document that’s necessary to consider if your business is going to be functioning online is a Privacy Policy. A privacy policy is legally required of any business that has a website that collects the private information of its users. Types of private information can include:
- Name
- Phone number
- Email address
- Postal address
- Bank details
So, if you’re going to be gathering any kind of information from your website’s users, then according to Australian privacy regulations, you need to have a privacy policy in place. As a privacy policy is a legal requirement, it needs to meet a certain standard in tick a few boxes for it to be relevant. Therefore, we suggest seeking the help of a legal expert when getting one drafted.
When it comes to legal documents, the exact ones you’ll need will depend on the specifics of your recruitment company. Even though we’ve listed a few common ones in this article, we strongly suggest getting in touch with one of our legal experts. They’ll be able to properly advise you on the right legal documents for your company and help draft them for you.
Are there Any other Legal Considerations For Starting A Recruitment Company?
Yes, there’s a number of legal considerations for starting a recruitment company. Registering your company and getting the right legal documents sorted aren’t the end of your legal considerations. You also need to ensure you’re running a company that is legally compliant in every way. Not doing so can lead to your company’s reputation taking a negative hit or facing serious legal penalties, both of which can be pretty hard to come back from.
A few regulations you may need to look out for include:
- The Australian Consumer Law
- Data and Privacy regulations
- Employment Law
- Intellectual Property laws
We’ve written more about the various legal regulations for companies here. You can also book a chat with one of our Regulatory Compliance experts for more detailed advice that’s specific to your recruitment company.
Next Steps
Starting a recruitment company can be a promising business venture, however it’s essential to take care of all the legal considerations. To summarise what we’ve discussed:
- Hiring new talent is time-consuming; recruiters help streamline the process for organisations
- Starting a recruitment company requires proper legal setup and protection
- Setting up a company offers legal protection and involves registering with ASIC
- Legal documents like Service Agreement, Website Terms and Conditions and Privacy Policy are essential
- Online presence requires managing liabilities – a Privacy Policy is legally required for data collection
- Legal considerations extend beyond registration, including compliance with Australian Consumer Law, data and privacy regulations, employment law, and intellectual property laws
If you would like a consultation on starting a recruitment company, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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