The downfall of hold harmless indemnity clauses

The RCSA have been fighting unfair indemnity clauses in client agreements for many years.

RCSA CEO Charles Cameron said hold harmless clauses, in all their guises, have placed disproportional and uninsurable risk upon staffing firms for too long, so he was happy to see their demise.

“The fall of the hold harmless clause, after years of fighting, shows just what this industry is capable of when we band together for a valid cause,” Charles said.

“We must maintain our non-acceptance of hold harmless clauses and unfair indemnity provisions.

“They aren’t good for your business. They send the wrong message to clients and they promote an abrogation of responsibility, which ultimately impacts upon service and candidates.”

Corporate account manager of RCSA Insurance, Victoria Watts, explained the most dangerous contract clauses were those that agreed to cover others.

Agreeing a hold harmless clause is a promise to keep the other party harmless against all loss.

“It involves assuming liability excluded by contractual liability exclusions in wordings and if you agree to hold harmless another party without any right to recover, this may negate cover,” Victoria said.

Furthermore, a hold harmless clause negates the insurer’s right of subrogation.

“This allows insurers to recover payments if a third party was liable. The insurer can only exercise the rights an insured has, if these have been contracted away, insurer’s rights are impinged,” Victoria said.

“However, the good news is we are seeing fewer and fewer of these.

“Clients must be realising how unreasonable these are and pushing back.

“If your contract still has a clause, you should negotiate to remove the clause, remembering no insurance covers “all” or “any” matters – every wording is subject to terms and exclusions.”

Victoria said the aim was to negotiate for each party to be responsible for their actions and rely on their insurance.

“If you still have not been able to negotiate removal, seek legal advice,” she said.

The RCSA’s ‘Say no to bad business’ effort will now turn its attention to the Retain A Recruiter campaign where all permanent recruitment service providers will be asked to say no to contingent fee structures, and yes to retained.

“Our industry is professional and it’s time we demanded to be treated that way, in all that we do,” Charles said.