Collection Of Fee By Testing Service Agencies

Collection Of Fee By Testing Service Agencies

The high degree of transparency and standard maintained by the testing service agencies in delivering services to the educational institutions, government and non-government offices is appreciated across the country. Testing procedures have been modernized by introducing latest technology for generating quick and accurate results. These testing service agencies hire professional and trained staff for conducting the testing/screening process in an efficient and transparent manner.

An employer intending to outsource the recruitment process, signs a Memorandum of Understanding or a contract with the testing service agency. These MoUs and contracts are with regard to the provision of services to the employer by the testing service agency by way of testing/screening the candidates for a job. In this transaction the employer is beneficiary of the services provided to it by the testing service agency for screening/examining the candidates. But the employer pays nothing in return. Payment in return for something is called ‘consideration’. Employer and the testing service agency agree that benefit of the transaction will go to the employer and the payment for the services provided by the testing service agency shall be paid by a third party i.e. candidate, who is not privy to the settlement reached between employer and the testing service agency. Furthermore, a contract is valid only when it fulfills all the essential requirement of a ‘valid contract’. ‘Undue influence’ and ‘Free consent’ are two main conditions (amongst others) for a contract to be valid. Here the candidate is not invited to participate and deal with the Employer and testing service agency on an equal basis. If such an event happens, even then employer and the testing service agency are in a position that they can dominate will of the candidate. Therefore, a candidate will always be influenced by the dominant position of employer and the testing service agency. Similarly consent obtained through undue influence cannot be termed as ‘free consent’. A contract in such an eventuality is not a ‘valid contract’.

The exemption to the principle of ‘payment in return i.e. consideration’ exists in the contract of agency. Principal delegates those powers to the agent, which are vested in the principal. The agent (testing service agency) derives his authority to act in pursuance of the contract from the principal (employer) and can go to the extent, to which the principal is allowed. The principal derives his powers/authority from the laws which regulate affairs of the employer. Therefore, when engaged by the employer, the testing service agency steps into the shoes of the employer and perform functions on behalf of the employer.

No doubt that the employer has full powers to test the abilities of candidates and choose a best one amongst them to be offered for employment and this is always backed by the laws. To this extent the employer can delegate power to the testing service agency. But when it comes to the imposition of ‘fee’, then the employer needs to first answer the following questions.-

  • Whether the employer is authorized by the parent statute to impose a ‘fee’ for testing/screening process of candidates ?
  • If answer of the first question is yes, then whether there exist any criteria for imposition of fee and determining the rates thereof ?
  • Whether the employer is authorized to delegate its power of collection of fee to its agent i.e. the testing service agency?
  • Whether such rules/regulations of the employer allow deposit of fee in the treasury of the employer and its disbursement in accordance with the rules/regulations of the employer or the fee to be deposited in the treasury of testing service agency and its disbursement according their will ?

If an employer answers these questions in the affirmative, then it can proceed to outsource the testing/screening process of candidates to testing service agencies.

There is another issue with regard to the procedure of hiring/engaging services of a testing service agency. Since the employer and testing service agency agree to collect the expenses from candidates, therefore, disbursement of the employer’s own funds is not involved. In such an eventuality, the employers usually do not go by the rules/regulations for procuring services of a testing service agency. They do not go for a competition between various testing service agencies. The Employers apply the ‘pick and choose’ formula and engage a testing service agency, which may be expensive for the candidates as compared to other testing service agencies. The Employers need to invite all the testing service agencies to participate in a competitive process and thereafter choose amongst them a best testing service agency, based on certain criteria through a transparent manner in accordance with law.

By asking to deposit the fee as a pre-condition, the employers and testing service agencies are compelling the candidates to perform an obligation which is due on part of the employer i.e. beneficiary. If it is purely contractual arrangement, then consent of candidate must be obtained in order to make him liable. If it is a settlement backed by law, it must explicitly envisage a transparent and fair procedure of hiring/engaging services of testing service agency, imposition of fee and determining the rates thereof, keeping in view the unemployed and jobless candidates. This aspect of the matter is still un-regulated and needs attention of the quarters concerned.


The views expressed in this article are those of the author and do not necessarily represent the views of or any organization with which he might be associated.

Luqman Khan

Author: Luqman Khan

The writer has done his LLB Degree from the Islamia University of Bahawalpur.