Temp-to-Perm Fee Clause UK | Conduct Regulations Transfer Fee Template
When a recruitment agency places a temporary worker who is later offered a permanent role by the hirer, disputes over transfer fees are common — and costly. Without a clearly drafted temp-to-perm fee clause in your terms of business, you risk losing the fee entirely. The Conduct of Employment Agencies and Employment Businesses Regulations 2003 (the Conduct Regulations) sets out specific rules governing transfer fees, opt-out periods, and the hirer's right to extend a temporary assignment instead of paying a fee. A properly structured clause must comply with these regulations, define the fee calculation method, and specify the relevant notice periods. Whether you are a recruitment agency protecting your income or a business reviewing agency terms, getting this clause right matters. Generate a compliant temp-to-perm fee clause template now.
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Key clauses in a Contract
Transfer Fee Calculation Method
This clause defines how the transfer fee is calculated — typically as a percentage of the permanent salary offered — and when it becomes payable. Under Regulation 10 of the Conduct Regulations 2003, agencies must clearly state the fee basis in their terms of business before the introduction takes place, otherwise the fee may be unenforceable.
Extended Hire Opt-Out Period
This clause gives the hirer the option to extend the temporary engagement for an agreed period instead of paying the transfer fee, as permitted under Regulation 10(5) of the Conduct Regulations 2003. The opt-out period and any associated temporary-to-permanent conversion terms must be expressly agreed in writing to be valid.
Introductions and Confidentiality
This clause establishes that a fee is triggered by any direct or indirect hire following the agency's introduction, including hires made through a third party to avoid the fee. It also prevents the hirer from passing candidate details to connected entities, protecting the agency's commercial interest and reducing the risk of fee avoidance arrangements.
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Generate free →Frequently asked questions
Can a recruitment agency charge a temp-to-perm fee if the hirer uses a different agency to make the permanent hire?
Yes, provided the original agency's terms of business define the introduction broadly enough to cover indirect hires. Courts have consistently held that where a hirer uses a second agency to circumvent a fee, the original introducer can still claim if they made the effective introduction. The key is that the terms must be clear about what constitutes an introduction before the candidate is presented.
What happens if the temp-to-perm fee clause is not included in the agency's terms of business before the placement starts?
If a transfer fee clause is not included in the written terms of business provided to the hirer before the introduction, Regulation 10 of the Conduct Regulations 2003 means the agency cannot legally charge that fee. The regulations require all material terms, including any transfer fee basis, to be agreed in writing prior to the introduction taking place.
How long can a hirer extend a temporary placement to avoid paying a temp-to-perm transfer fee?
The Conduct Regulations 2003 do not set a fixed maximum extension period, so this is a matter of what the parties agree in the terms of business. However, the extension must be genuine employment through the agency, and the hirer must actually engage the worker for that period — they cannot simply agree an extension on paper and then hire permanently after a short gap without paying the fee.
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.