Interim Management Terms of Business UK | Interim Placement Agency Contract
Placing interim managers without a signed Terms of Business exposes recruitment agencies and client businesses to disputed fees, unclear liability, and no enforceable recourse when things go wrong. An interim management Terms of Business sets out the commercial relationship between the agency, the interim manager, and the end client — covering placement fees, payment terms enforceable under the Late Payment of Commercial Debts Act 1998, substitution rights, and IR35 status responsibilities under Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003. Without this document, agencies risk non-payment, clients risk misclassified engagements, and interim managers risk working without agreed protections. This contract type is distinct from a standard permanent recruitment ToB because it must address ongoing assignment terms, not just a one-off introduction fee. Generate your interim management Terms of Business now.
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Key clauses in a Contract
IR35 Status and Liability
This clause defines which party is responsible for determining the IR35 status of the interim manager under Chapter 10 of ITEPA 2003, and who bears the tax liability if a determination is later found to be incorrect. For placements in medium and large private sector clients, the end client must make the status determination, and this clause records that allocation of responsibility in writing to protect the agency from downstream HMRC liability.
Fee Structure and Payment Terms
This clause sets out how the agency's margin or placement fee is calculated, when invoices fall due, and the statutory interest that accrues on late payments under the Late Payment of Commercial Debts Act 1998. Without clearly drafted payment terms, agencies have no contractual basis to charge the 8% above Bank of England base rate interest that the Act permits, and disputes over margin calculations become much harder to resolve.
Assignment Variation and Termination
This clause governs how an interim assignment can be extended, varied, or ended early by either the client or the agency, and what notice periods apply in each scenario. It protects the agency's revenue stream by specifying that early termination by the client does not automatically extinguish accrued fees already invoiced, and it aligns with the terms of any separate contract between the agency and the interim manager's personal service company.
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Who is responsible for conducting the IR35 status determination in an interim management placement?
Since April 2021, medium and large private sector clients are required to make the IR35 status determination under Chapter 10 of ITEPA 2003 and issue a Status Determination Statement to both the agency and the worker. Small companies, as defined under the Companies Act 2006, are exempt and responsibility falls back to the worker's personal service company. The Terms of Business should record this allocation explicitly so all parties understand their obligations before the assignment begins.
Can an agency charge interest if a client pays the interim management fee late?
Yes. Where the Terms of Business constitute a qualifying debt between businesses, the Late Payment of Commercial Debts Act 1998 entitles the creditor to statutory interest at 8% above the Bank of England base rate from the date payment was due. The agency can also claim fixed debt recovery costs of between £40 and £100 depending on the debt amount. These rights apply automatically by statute, but including them explicitly in the Terms of Business makes enforcement significantly more straightforward.
Does an interim management Terms of Business need to cover the right of substitution?
Yes, and it matters for IR35 purposes as well as commercial clarity. A genuine, unfettered right of substitution is one of the indicators that the interim manager is operating outside IR35, so the Terms of Business should reflect whether the agency or the end client has any right to reject a proposed substitute and on what grounds. If the client can refuse substitutes at will, HMRC may treat that as evidence of personal service, which weighs in favour of an inside-IR35 determination.
The information on this page is for general informational purposes only and does not constitute legal advice. Contracto generates AI-assisted contract templates — they are not a substitute for advice from a qualified solicitor. For high-value or complex engagements, always seek independent legal review.