When I wrote about staff augmentation in our previous blog post I mentioned that one of the first things staff augmentation service agencies do after you indicate an interest in their service is to draw up a binding contract with service agreements.
In other articles, we’ve also gone over how to properly search and vet these agencies including recommending selection frameworks such as researching the agency’s reputation, reviews, and past clients.
In this one, we would like to extend our knowledge of the subject matter from previous posts, to discuss what you need to know about staff augmentation service contracts as we mentioned in the first paragraph.
Let’s start with a brief overview of what this contract is.
Understand staff augmentation agreements
In plain and simple terms, staff augmentation service agreements are contractual arrangements between a company and a third-party service provider —which is typically an outsourcing company or a staffing agency, designed to provide the client company with additional skilled personnel to supplement their existing workforce for a specific project, period or on an ongoing basis.
In most cases, when you decide to supplement your team this way with talent from a third-party source, you will need to sign this contract to fully detail the obligations of both parties.
In addition, since what is enforceable in the agreement typically follows the laid down laws of the jurisdiction of your third-party source, having legal counsel is almost always required in the process to ensure that the contract is both comprehensive in detail, legally sound, and aligns with the objectives of both parties.
I cannot stress how important involving a legal professional is to this process. They are crucial to negotiating and drafting an agreement that protects your interests and ensures a smooth collaboration.
Key components of staff augmentation agreements
Since we’re talking about smooth collaboration, it’s important to state here that although there is a list of standard clauses that should be included in every staff augmentation service contract, drafting a more comprehensive agreement perhaps due to the nature of your business might require custom clauses that only a legal professional could include.
What this means is that there is not a single template that works for everyone when it comes to staff augmentation service contracts and except your company is small and without means, you most likely would need a lawyer to make sure your contract is sound and tailored to your need.
With that said, let’s go over the standard clauses relevant to staff augmentation agreements.
In almost all cases, the key components of staff augmentation service agreements are preceded by a section that describes the type of contract (in this case, staff augmentation), the date it was made, and signatories like in the quote below, before defining all of the clauses after it.
“THIS AGREEMENT FOR STAFF AUGMENTATION SERVICES made on (date) is by and between (your company) and (the outsourcing company), a staff augmentation agency located in (location).”
Scope of Work: Staff augmentation service contracts typically define the scope of work and the specific tasks or projects the third-party talent is required for. Being one of the most important parts of any staff augmentation service contract, it is expected to clearly explain the role, obligations, and duties the subcontractor is bound to fulfill especially since It is often the first section that’s looked at in the case of a contractual dispute.
Billing and Payment: This clause defines the billing and payment arrangement between your company and the staffing agency, including the rate structure (hourly, monthly, or otherwise), payment schedules, and any additional costs such as expenses or equipment.
Non-Disclosure Agreement: As a crucial part of the agreement, this section usually addresses confidentiality issues, data security, and intellectual property rights between your company and the third-party agency to protect and prevent the leak of sensitive information such as trade secrets.
Non-Compete Clause: Like every other clause listed above, staff augmentation service contracts typically contain a section to restrict contracted talents from doing business with, or becoming employees of a company directly in competition with yours within a specific period.
Dispute Resolution: The dispute resolution section of staff augmentation service agreements is used to specify the process for resolving disputes or disagreements that may arise during the course of engagement.
Termination Clause: Arguably one of the most important parts of an agreement. This section makes provisions for terminating the contract, whether due to performance issues, changes in project requirements, or other reasons. It defines notice periods and any associated penalties.
Revisiting staff augmentation
Now that we know what standard clauses are included in staff augmentation service contracts, let’s end the article by taking another look at what staff augmentation is to revive our knowledge.
Staff augmentation is an approach commonly used in various industries and sectors to address:
- Short-term resource gaps,
- Tackle specific projects, or
- Gain access to specialized skills and expertise without the long-term commitment of hiring full-time employees.
It’s a way to your in-house workforce with additional temporary or contract staff from a third-party source. When used correctly it can serve as an advantage to your company, although you need to be able to determine when it’s right to choose.
Staff augmentation service agreements are crucial to the success of the process of supplementing your company’s workforce with additional temporary or contract staff.
They are a contractual arrangement between a company (the client) and a staffing or outsourcing agency (the vendor) that includes several standard clauses such as:
- Project Scope
- Billing and Payment Clause
- Non-Disclosure Agreement
- Non-Compete Clause
- Dispute Resolution Clause
- Termination Clause
In addition, they also often include custom clauses —to provide a more robust collaboration framework based on the nature of the client’s business, which can only be defined by legal professionals.
Are you searching for a staff augmentation agency? If so, kindly reach out to our team for a free consultation to get a sense of our staffing solutions.
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