Split Fee Recruitment Agreement UK | Agency-to-Agency Fee Sharing Contract
When two recruitment agencies collaborate to place a candidate, splitting the fee sounds straightforward until one party places the candidate and withholds payment. A split fee recruitment agreement removes that risk by setting out each agency's share, payment triggers, and what happens if the placement falls through. Without a written agreement, you have little legal footing under the Employment Agencies Act 1973 or the Conduct of Employment Agencies and Employment Businesses Regulations 2003. The Late Payment of Commercial Debts Act 1998 also entitles you to statutory interest on overdue invoices, but only if your payment terms are clearly documented. Whether you are the introducing agency or the filling agency, get the terms confirmed in writing before you share a CV. Generate your split fee recruitment agreement now.
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Key clauses in a Contract
Fee Split and Calculation
This clause defines each agency's percentage share of the placement fee and how that fee is calculated — whether based on first-year salary, a fixed amount, or another agreed metric. Without a precise split written into the contract, disputes are common and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 provides no default formula to fall back on.
Payment Trigger and Terms
This clause specifies exactly when the introducing agency's payment becomes due — typically when the end client pays the filling agency — and sets a maximum period for onward payment. The Late Payment of Commercial Debts Act 1998 allows statutory interest at 8% above the Bank of England base rate on overdue B2B invoices, but that right is only practically enforceable if clear payment dates are written into the agreement.
Candidate Ownership and Non-Circumvention
This clause prevents the filling agency from bypassing the introducing agency by dealing directly with the candidate or end client after receiving an introduction. It establishes how long the protection lasts and what remedy applies if the clause is breached, which is particularly important given that the Employment Agencies Act 1973 does not automatically restrict an agency from working with a candidate it has been introduced to.
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Generate free →Frequently asked questions
Is a verbal split fee agreement legally binding in the UK?
A verbal agreement can technically be binding under general contract law principles, but proving its terms in a dispute is extremely difficult. Without written evidence of the agreed split percentage, payment timing, and any rebate provisions, a county court claim becomes your word against theirs. A written agreement signed by both parties is the only reliable way to protect your fee.
What happens to the split fee if the candidate leaves during the rebate period?
If the end client triggers a rebate or replacement clause with the filling agency, the split fee agreement should specify how that reduction is shared between the two agencies. Without a clear provision, the filling agency may absorb the full rebate and pass the reduction entirely to the introducing agency, even though both parties shared the original fee. Draft the rebate apportionment terms before the placement completes, not after.
Do split fee arrangements have any IR35 implications for either agency?
A split fee recruitment agreement sits between two business entities, so IR35 under Chapter 10 of ITEPA 2003 does not directly apply to the inter-agency arrangement itself. However, if the candidate being placed is a contractor operating through a personal service company, the filling agency and end client still carry their usual off-payroll working obligations regardless of how the fee is divided. The split fee structure does not alter either party's responsibilities in an IR35 status 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.