Placement Fee Agreement Template UK | Recruitment
Recruitment agencies and headhunters frequently face disputes over unpaid placement fees, fee structures, and rebate obligations when a placed candidate leaves early. Without a robust written agreement, recovering fees through the courts becomes significantly harder. A placement fee agreement establishes the exact terms under which a recruitment fee becomes payable, the applicable rebate or replacement guarantee period, and what happens if the client refuses to pay. Under the Late Payment of Commercial Debts Act 1998, you are legally entitled to claim statutory interest and compensation on overdue invoices, but only when a clear contractual debt exists. Defining fee triggers, payment timescales, and candidate ownership in writing protects your agency from fee disputes and poaching arguments. Generate a professionally drafted UK placement fee agreement now and protect your recruitment revenue from day one.
Generate your Recruiter Terms of Business free →Key clauses in a Recruiter Terms of Business
Fee Trigger and Calculation
This clause defines precisely when the placement fee becomes payable, whether on acceptance of an offer, the candidate's start date, or first day of employment, and how the fee is calculated, typically as a percentage of first-year gross salary. Without this clarity, clients frequently dispute whether a fee is owed at all, particularly where negotiations collapse after an offer is made.
Rebate and Guarantee Period
This clause sets out the sliding-scale rebate or free replacement obligations if the placed candidate leaves or is dismissed within an agreed period, commonly 4 to 12 weeks. Defining this expressly limits your agency's financial exposure and prevents clients from demanding full refunds outside any agreed window, which could otherwise be pursued as an unjust enrichment claim under English contract law.
Candidate Ownership and Exclusivity
This clause establishes that any candidate introduced by the agency remains the agency's introduction for a defined period, typically 12 to 24 months, meaning a fee is owed even if the client hires them through a different route later. This protects against circumvention arrangements and is enforceable under standard English contract principles, provided the introduction is clearly documented at the time it was made.
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Generate free →Frequently asked questions
Can I charge statutory interest on an unpaid recruitment placement fee in the UK?
Yes. Under the Late Payment of Commercial Debts Act 1998, you can charge statutory interest at 8% above the Bank of England base rate on overdue business-to-business invoices, along with fixed debt recovery compensation of between £40 and £100 depending on the debt amount. Your placement fee agreement should specify a payment due date, as interest runs from the day after that date if payment is not received.
What happens if a client hires my candidate directly after rejecting my terms?
If you can demonstrate that you introduced the candidate to the client, most UK courts will treat a quantum meruit or implied contract claim as viable even without a signed agreement, though this is significantly harder to win. A written placement fee agreement with a clear candidate ownership clause removes this uncertainty by contractually binding the client to pay a fee for any hire of an introduced candidate within the defined exclusivity window.
Are placement fee agreements subject to VAT in the UK?
Yes. Recruitment placement fees are a taxable supply of services under UK VAT legislation, and if your agency is VAT-registered you must charge VAT at the standard rate of 20% on top of your placement fee. Your agreement should state clearly whether the quoted fee is exclusive or inclusive of VAT to avoid disputes at invoice stage, and your VAT registration number should appear on any invoice you issue.
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.