The recruitment payment model

Permanent placement fees in UK recruitment are typically structured as a percentage of the candidate's first‑year base salary, between 15 and 25 percent depending on the role and the agency's positioning. The fee is invoiced on the candidate's start date. Standard payment terms are 30 days, sometimes negotiated to 14 days for established relationships.

The refund clause attached to most permanent placements works on a sliding scale. Typical: 100 percent refund if the candidate leaves in the first month, 50 percent in months two and three, 25 percent in months four to six, zero thereafter. The exact percentages vary by agency. Some agencies use a "free replacement" model rather than a refund.

Contract placements (interim and temporary roles) are different: the agency invoices weekly or monthly for the duration of the engagement, the client pays per invoice, and the recovery profile is closer to standard B2B services.

Where the disputes arise

The most common dispute pattern: a permanent placement starts, the agency invoices, the client delays payment past the contractual due date. The agency chases. The client raises a performance concern about the candidate. The agency reads the client's email as a precursor to a refund claim under the placement guarantee.

The recovery practitioner's first reading: was the performance concern raised through the contractual refund process? Most placement contracts require formal written notice, often within a defined window of the candidate's departure or non‑performance, naming the specific issue. A vague email about "concerns" sent in response to a chaser does not invoke the refund clause.

The second reading: has the candidate actually left, or is the client claiming a future departure? Most refund clauses crystallise on the candidate's actual departure, not on an anticipated one. A "we may need a refund if things continue" message is not a basis for withholding the placement fee.

The Late Payment Act applies in full

Recruitment placements are B2B services. The Late Payment of Commercial Debts (Interest) Act 1998 applies. Statutory compensation, statutory interest at 8 percent above the Bank of England base rate, and reasonable recovery costs are recoverable from the client in addition to the principal placement fee. See our pillar guide for the mechanics.

The Act does not yield to the refund clause. If the candidate has started, the placement fee falls due on the contractual due date. A possible future refund is a separate accounting matter. The client must pay first and claim the refund later if it crystallises.

This is the key point that resolves most recruitment debt disputes: the refund clause does not entitle the client to delay payment in anticipation of a possible refund. We make this point in Letter I.

Refund triggered after payment

Where the candidate genuinely leaves within the refund window after the fee has been paid, the refund is a separate transaction: a credit note from the agency to the client for the refund percentage. The original placement fee remains payable; the refund is a subsequent event. Most agencies handle this commercially without disputes.

Where the candidate leaves before the fee is paid, the refund clause may apply to reduce the fee due. We assess these matters at intake. The contract's terms govern: percentage, window, evidence required, written notice.

Specific recruitment contract clauses we look for

  • The fee structure (percentage of first‑year salary; flat fee; tiered).
  • The payment terms (typically 30 days from start; sometimes 14 days; rarely on offer‑acceptance).
  • The refund or replacement clause (sliding scale; trigger conditions; written notice requirements; window).
  • Restrictive covenants on direct hire (some clients try to bypass the agency by hiring directly after CV introduction; the contract usually addresses this).
  • Late payment interest charges (most agency contracts include these but rarely enforce them).
  • Termination of the recruitment services agreement (separate from the placement contract).

Direct hire and back‑door placements

A recurring issue: the agency introduces a candidate's CV, the client interviews and hires the candidate without informing the agency, the client refuses to pay claiming they "found the candidate through a different channel." Most recruitment contracts include language making the agency the introducing source for any candidate whose CV the agency has presented within a defined period (typically 12 months).

Recovery on these matters depends on the documentary trail. Email records of the CV submission, the candidate's name and the date of introduction, the client's acknowledgment of receipt of the CV. With this trail, the matter is recoverable. Without it, the agency's position is procedurally weak.

Our approach to recruitment debt recovery

Our intake form for recruitment matters asks for the recruitment services agreement (or terms of business), the placement contract for the specific candidate, the email trail of CV introduction and offer, the candidate start date, and any client correspondence raising performance concerns or refund claims. We assess within twenty‑four working hours.

If we accept the matter, Letter I issues the same day. It cites the Late Payment Act, the contractual payment terms, the refund clause's specific procedural requirements (and how the client has failed to invoke them properly), and the principal due. Recovery costs are payable by the client.

Most recruitment debtors settle within Letter II. The amount in dispute (typically a single placement fee of £5,000 to £25,000) does not justify the cost of defending a county court claim, and the client's manufactured refund objection does not survive contractual scrutiny.

Common questions on recruitment debt

The client says the candidate is not performing. Can they withhold the fee?

Generally no, unless they have invoked the refund clause through the contractual process. A vague performance concern raised in response to a chaser is not a basis for delaying payment. The fee is due on the contractual date; refunds are a separate event.

What if the candidate has actually left within the refund window?

The refund clause crystallises. We assess the evidence (departure date, written notice, the contractual refund percentage). The recoverable balance reflects the contractual refund. Statutory compensation and recovery costs still apply on the net amount.

Can I claim back a fee I have already paid if the candidate leaves?

This is a refund claim by the client against the agency, not a debt‑recovery matter. The agency's response depends on the contract: most agencies handle this commercially with a credit note. We act for agencies pursuing payment, not for clients seeking refunds.

The client hired the candidate without telling us. Can we still claim the fee?

Yes, if the contract has standard introducer language and you have documentary evidence of the CV introduction. We assess these matters at intake and pursue them where the documentary trail supports the claim.