Recruiter Terms of Business Template UK | ToB Agreement
Recruitment agencies and headhunters face significant financial exposure when placing candidates without watertight terms of business in place — leaving fees, rebate periods, and liability entirely unprotected. A professionally drafted Recruiter Terms of Business agreement establishes the contractual foundation for every placement, whether permanent, contract, or temporary, and ensures compliance with the Conduct of Employment Agencies and Employment Businesses Regulations 2003. Where contractors are placed, terms must also address IR35 status obligations under Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003, and payment provisions should reflect the Late Payment of Commercial Debts Act 1998 to protect against slow-paying clients. Without clear terms, disputes over refunds, exclusivity, and substitution rights become costly and difficult to resolve. Generate a compliant, customisable UK recruiter terms of business template now.
Generate your Recruiter Terms of Business free →Key clauses in a Recruiter Terms of Business
Fee Structure and Payment Terms
This clause defines how and when recruitment fees become payable, including the percentage or fixed-fee basis, invoicing triggers, and payment deadlines. Under the Late Payment of Commercial Debts Act 1998, agencies can claim statutory interest at 8% above the Bank of England base rate on overdue invoices, making explicit payment terms essential to enforcing this right.
Rebate and Guarantee Period
This clause sets out the conditions under which a full or partial fee refund is due if a placed candidate leaves or is dismissed within a specified period, typically 8–12 weeks for permanent placements. Clearly defining the rebate sliding scale and exclusions — such as redundancy or client-side conduct — prevents costly disputes and protects the agency's revenue in accordance with the Conduct of Employment Agencies and Employment Businesses Regulations 2003.
IR35 and Supply Chain Compliance
Where the agency supplies contractors to medium or large end-clients, this clause allocates responsibility for IR35 status determinations under Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003, following the off-payroll working rules that apply from April 2021. It also sets out indemnity provisions so that liability for incorrect determinations sits with the correct party in the contractual chain, protecting the agency from unexpected tax liabilities.
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Generate free →Frequently asked questions
Do UK recruitment agencies legally need terms of business in writing?
While no single statute mandates a written terms of business document for every engagement, the Conduct of Employment Agencies and Employment Businesses Regulations 2003 require employment businesses to agree written terms with both work-seekers and hirers before supplying temporary workers. For permanent placements, written terms are not legally required but are strongly recommended to make fee agreements legally enforceable and to prevent disputes over rebate obligations.
Can a recruiter charge VAT on placement fees under UK terms of business?
Yes — recruitment fees for both permanent and temporary placements are subject to VAT at the standard rate of 20% under UK VAT rules administered by HMRC. Your terms of business should state clearly whether quoted fees are exclusive or inclusive of VAT, and your agency must issue a valid VAT invoice to allow clients to reclaim input tax where eligible.
What happens if a client introduces our placed candidate to a third party without telling us?
This scenario — known as an indirect placement or introduction transfer — should be addressed explicitly in an anti-poaching or indirect introduction clause within your terms of business. Such a clause entitles the agency to a full placement fee if the client passes the candidate to an affiliated company or third party within a defined period, typically 12–24 months, and is enforceable as a legitimate contractual protection under general UK contract law principles.
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.