Recruitment agreements can be deceptively simple on the surface—an agency supplies a candidate, and in return, you pay a fee.
However, the small print often hides clauses that can lead to significant financial and legal exposure if not properly reviewed.
Whether you’re a start-up scaling your team or an established business bringing in specialist talent, it’s important to scrutinise the recruiter’s terms before signing.
Here are five key areas to watch out for:
The most important clause that should be negotiated in employment agency terms are the rebate clauses, where you’re entitled to a refund or credit if a candidate doesn’t work out within a certain period. Whilst initially sounding like a helpful clause, they can be heavily weighted in the recruiter’s favour. Many contain complex conditions that make the rebate hard to claim in practice—such as requiring strict timelines for termination and notification.
Agencies will only want to give a short period for the rebate to apply of say one to three months, and the rebate amount will often scale down by a percentage after each month is passed, meaning very little is rebated towards the end of the period. Given it will often take time for a hire to bed in and for both parties to decide if the match is correct, employers should ensure the rebate period is of a long enough period to allow a decision on whether the hire is the right one to be made, and for the rebate amount to remain at a meaningful level for as long as possible.
One often-overlooked clause in recruitment contracts relates to re-hiring fees. It may be that a hire doesn’t initially work out for the candidate, or the candidate is tempted away by a rival not long after being employed. If it turned out that the grass wasn’t actually greener and the candidate decides to return, some agency agreements impose further fees if you re-engage the candidate within a set period — commonly 12 months after the initial termination. The amount can vary but in some cases the same fee paid for the initial recruitment may be charged again, even though the recruiter had no role in the re-hiring. Employers will therefore want to argue that no further payment should be due where no actual services have been performed, although in practice it may not be unreasonable for some fee to be due on the rehiring where a rebate was paid back to the employer upon the candidate leaving, so a judgement should be made as to what terms are fair to agree to.
Recruiter payment terms often state that fees are due upon a candidate’s acceptance of a job offer or even earlier. But this may not align with internal approval and finance processes, especially in larger organisations. In addition, should a candidate ultimate decide they do not want to start the job, as the fee will already have been paid it will be down to the rebate terms as to how much of the fee is returned – so this term needs careful consideration.
In addition, unreasonably short payment terms (e.g. 7 days from invoice) can create unnecessary administrative burden or even lead to disputes. It’s important to ensure payment terms provide a suitable window (typically 30 days or more) and are triggered by clear, measurable events—such as a candidate’s commencement in the role and an undisputed invoice. Flexibility for dispute resolution or invoice queries should also be built in to avoid default liabilities. And remember – should the fee not be paid on time this could result in the contract being terminated for material breach meaning the rights granted to the employer such as rebate fees then being unenforceable.
Always be wary of potentially ‘hidden’ add-ons for fees such as inclusion of commission (beyond base salary of a candidate). Such fees can cover the value of additional employee benefits, bonuses and pay rises, which can unexpectedly increase the overall cost of the commission payment due to the business.
Recruiter contracts often contain clauses that seek to limit or exclude the agency’s liability—even for direct losses. This could mean that if a recruiter misrepresents or disparages the business to third parties or discloses confidential information, the recruiter would bear no responsibility for such actions.
While recruiters understandably want to limit their exposure, it’s important that these clauses are balanced. Total exclusions of liability, or unreasonably low liability caps, can leave your business bearing unnecessary risk.
Consider seeking mutual limitations of liability that reflect the purpose and value of the contract and allow for recourse in the event of serious negligence or misrepresentation.
The recruitment process involves sharing sensitive personal data and commercially confidential information. It’s essential that recruiter terms comply with UK data protection laws, including the UK GDPR. This includes obligations around secure data handling, data subject rights, and processing agreements where appropriate.
Standard confidentiality wording should also be included to prevent the misuse of proprietary information—such as organisational structure, salary benchmarks, or business plans disclosed during the hiring process.
Unchecked recruiter terms can result in:
These contracts are more than routine paperwork—they’re binding commercial agreements with legal and operational consequences for the business.
Engaging legal professionals to review recruiter terms before you sign helps ensure fairness, compliance, and alignment with your business needs. A thorough legal review isn’t just about risk reduction—it’s about supporting smoother, more effective hiring processes for your organisation.
Need support reviewing your recruiter contracts? Our expert legal team is here to help you protect your interests and streamline your recruitment strategy.
Get in touch today to ensure your contracts are working for you—not against you.