Recruiter Terms of Business UK: every clause explained.
Fee crystallisation, backdoor hire, rebate schedule, Conduct Regulations 2003 — what each clause does, what happens when one is missing, and when your Terms of Business must be signed.
Six critical clauses — with real contract language
Fee crystallisation on introduction
Contract language
The Recruitment Agency's fee shall crystallise and become due upon introduction of a Candidate to the Client. For the purposes of this Agreement, "introduction" means the submission of a Candidate's CV, profile, or details to the Client by any means. The fee shall be payable in full whether or not the Client directly arranges interviews, makes an offer, or hires the Candidate following introduction, regardless of the means by which the placement is ultimately made.
This is the most important clause in any Terms of Business. Without it, clients can argue that the fee is only due when a candidate starts, accepts, or passes probation — creating multiple exit points to avoid payment. Crystallisation on introduction removes all ambiguity: the fee is earned the moment the CV is submitted, regardless of what happens next.
Without this clause: a client receives your candidate's CV, decides they are interested, waits until your engagement expires, and contacts the candidate directly. Your fee claim is weakened because you cannot prove the placement resulted directly from your introduction.
Backdoor hire and off-limits period
Contract language
If, within 24 months of the date of introduction ("the Off-Limits Period"), the Client or any associated company engages, employs, or contracts with a Candidate introduced by the Agency — whether directly, through another agency, or by any other means — the full placement fee shall be immediately due and payable. The Client's contact with the Candidate during the Off-Limits Period, whether initiated by the Client or the Candidate, shall trigger this obligation. "Associated company" includes any parent, subsidiary, or company under common ownership or control.
Backdoor hires are the most common way recruiters lose fees. A client meets a candidate through your introduction, waits for your relationship to cool, and re-engages them 6 months later directly or through another agency. The 24-month off-limits period closes this window. The "any means" language prevents clients from using a different agency as a technical workaround. The "associated company" clause prevents the fee from being avoided by having a related entity do the hiring.
If your current ToB says "re-introduced through another agency" instead of "introduced by any means," you may have no claim when a client uses a second agency to hire a candidate you first surfaced.
Rebate schedule
Contract language
In the event that a Candidate placed under this Agreement resigns or is dismissed for capability or conduct within 8 weeks of commencing employment, the following pro-rated rebate shall apply: weeks 1–4: 75% of placement fee; weeks 5–8: 35% of placement fee; after week 8: no rebate. No rebate shall apply where: (a) the Client has materially changed the role, remuneration, or working conditions offered at placement; (b) the termination is by reason of redundancy; or (c) the Candidate is re-engaged by the Client or an associated company within 6 months of termination.
A rebate schedule protects clients but must be drafted carefully to protect the recruiter too. The exclusions are critical: a client who changes the job after the candidate starts, makes the candidate redundant, or re-hires the candidate within months should not receive a rebate. The "re-engaged within 6 months" clause closes the loop on clients who manufacture a departure to claim a rebate and then re-hire the candidate.
A rebate schedule without the exclusion clauses effectively allows clients to terminate a candidate for any reason, claim a partial refund, and face no consequences for the conduct that led to the departure.
Conduct Regulations 2003 compliance
Contract language
Both parties acknowledge that this Agreement is governed by the Conduct of Employment Agencies and Employment Businesses Regulations 2003 ("the Regulations"). The Agency shall provide the Client with the information required under the Regulations before making any introduction. The Client shall inform the Agency immediately if a Candidate is engaged in any capacity other than that specified in the original introduction, and shall pay the applicable fee for any such engagement.
The Conduct Regulations 2003 set out minimum requirements for how employment agencies and employment businesses operate. Including a Conduct Regs reference has two functions: it demonstrates compliance (important for regulated sector clients) and it creates a contractual obligation on the client to provide the information the Regulations require, including notification of any changed-role engagement.
If you place a candidate for a "6-month contract" and the client converts them to a permanent role without telling you, the Conduct Regs clause gives you the contractual basis to charge a separate permanent placement fee.
Payment terms and late payment provisions
Contract language
The placement fee shall be invoiced on the Candidate's start date and shall be due and payable within 14 days of the invoice date. If any invoice remains unpaid after its due date, the Agency shall be entitled to charge interest at the rate of 8% per annum above the Bank of England base rate under the Late Payment of Commercial Debts (Interest) Act 1998, together with fixed compensation of £70 per overdue invoice. The Agency reserves the right to suspend introductions to the Client while any invoice remains outstanding.
14-day net payment is the industry standard for recruitment fees. The Late Payment Act 1998 reference anchors the interest rate and compensation to statute — giving you a stronger claim than a contractual rate alone. The suspension right is the most effective lever: clients who ignore invoices will respond quickly when told no further candidates will be submitted.
Without an explicit Late Payment Act reference, your interest claim is a contractual one that requires the client to have agreed to the rate. The statutory reference removes that argument.
Definition of introduction
Contract language
"Introduction" means the provision of information identifying a Candidate to the Client by any means, including but not limited to: submission of a CV, profile, LinkedIn profile, name, or any other identifying information; verbal introduction in a meeting, call, or other communication; or submission via an online portal, ATS, or job board. An introduction is made at the point the information is provided to the Client, regardless of whether the Client acknowledges receipt.
Disputes about whether an introduction was made often hinge on the definition. Without a broad definition, clients claim they found the candidate independently, that the CV was not "submitted" properly, or that a verbal mention does not count. This clause closes every gap: name drop in a call, LinkedIn profile sent by email, ATS submission without acknowledgement — all constitute an introduction.
A client who receives a candidate's name verbally in a meeting but claims no formal introduction was made can defeat a fee claim based on a narrow introduction definition. This clause prevents that argument.
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Frequently asked questions
When must a recruiter get a Terms of Business signed?
Before submitting any candidate. Under the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003, recruitment terms must be agreed in writing before the introduction is made. A ToB signed after the CV is submitted has significantly weakened legal force in any fee dispute.
What is fee crystallisation on introduction?
Fee crystallisation on introduction means the recruiter's fee is earned the moment a candidate is introduced to the client employer — not when the candidate starts, accepts an offer, or completes a probation period. This is the most important clause in any recruiter ToB because it prevents clients from claiming no fee is owed when a candidate is hired directly after being introduced.
What is a backdoor hire clause?
A backdoor hire clause protects the recruiter when a client contacts an introduced candidate directly and hires them without going through the recruiter. It defines the off-limits period (typically 12–24 months from the date of introduction) and the penalty for breach (typically the full placement fee as liquidated damages).
What should a recruiter rebate schedule say?
A rebate schedule should specify the exact percentage refunded if a placed candidate leaves within the rebate period (typically 8–12 weeks), the tiered structure (e.g. 100% in weeks 1–4, 50% in weeks 5–8, 0% thereafter), the trigger event (resignation or dismissal for performance, not redundancy), and the payment deadline for any rebate (typically 14 days from trigger).
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