Recruitment Terms of Business: Clauses That Protect Your Fees

A recruitment agency's terms of business protect your fees when they cover seven things clearly: when the terms are accepted, what counts as an introduction, how long you're protected, what the fee is, when it's due, what happens if the candidate leaves, and what the client can't do with your candidate's details. Vague wording on any of these is where fee disputes start. This is a general guide, not legal advice: have a lawyer in your own jurisdiction draft or review your actual terms.

Why do terms of business matter more than the contract with the candidate?

Because the client is the one who pays. If a client hires someone you introduced and there are no signed terms, you're relying on custom and goodwill. With clear terms, an unpaid fee becomes a straightforward invoice rather than an argument about what was "understood".

Which clauses should every set of terms include?

1. Acceptance. Say how the client accepts: a signature, or by conduct (for example, interviewing a candidate you've sent). Some published agency terms treat interviewing a candidate as acceptance. Whether that holds up depends on the jurisdiction, so a signature is still stronger.
2. What counts as an introduction. Define it broadly enough to include a CV sent by email, an interview arranged, or a candidate's details passed to someone else at the client. Without this, "we never saw that CV" becomes the standard reply.
3. The introduction period. This is how long after the introduction you're owed a fee if the client hires the person, even if the hire happens by a different route. Published examples run around 12 months from the introduction, but check what's normal for your market and be able to justify yours.
4. Indirect hires. Cover the client hiring through a sister company, a third party, or as a contractor first and permanent later. This is the loophole behind many backdoor hires.
5. The fee. State it as a percentage of defined remuneration, say what's included (bonus, allowances, benefits), and set a minimum fee. "Salary" alone is ambiguous; define it.
6. Payment terms. Invoice on start date, with a stated number of days to pay and interest on late payment. Some agencies make the rebate conditional on the invoice being paid on time, which is a reasonable lever.
7. Rebate or replacement. If the candidate leaves early, what do you owe? Published examples use tiers: a full rebate for a very early exit, a partial one later. One large agency's published terms have, at the time of writing, tiers along the lines of a full rebate in the first six weeks and half up to 26 weeks; check the current version. Choose terms you can afford to honour, and write the conditions plainly.

Also worth including: the client must not pass your candidates' details to third parties without paying the fee, and the process for confirming a start date so you actually find out about hires.

What if I place temporary workers?

In the UK, the rules are tighter. The Conduct of Employment Agencies and Employment Businesses Regulations 2003, regulation 10 limits when an agency can charge a hirer a fee for taking on a temp directly. Terms that charge a transfer fee can be unenforceable unless the hirer is offered the option of an extended hire period instead, and charges are restricted once a set period has passed. Anything touching temp-to-perm needs specific legal advice. Don't copy permanent-placement wording into temp terms.

How do I make sure clients actually accept them?

Send your terms before the first CV, not after the first interview. Put them in the first email and ask for a signed copy before you submit candidates. Then keep a record of who signed and when. A client you can't prove accepted your terms is a client whose fee you'll struggle to enforce.

What are the limits of terms of business?

Terms don't enforce themselves. They're only useful if you know a hire has happened, and many agencies learn about a backdoor hire months late, if at all. Our Backdoor Hire Checker flags candidates later hired by clients, but the legal side still needs a lawyer.

Also, terms vary by country. What's standard and enforceable in the UK may not be in the UAE or Saudi Arabia, where local employment law and the customs of the market differ.

Most disputes aren't about the big clauses. They're about a definition nobody wrote down. If you're tidying your terms, the recruitment AI guide covers other ways small agencies protect time and revenue, and retained vs contingent shows how fee structure changes your risk.

Want a second pair of eyes on how your agency handles the admin side of fees? Get in touch.