Recruitment consultants and executive search agencies invest significant labor sourcing, vetting, and interviewing exceptional candidates for corporate clients. However, sending candidate resumes before the client has formally executed a Recruitment Terms of Business agreement exposes the agency to fee circumvention, where a hiring manager secretly interviews the candidate directly or hires them through another channel without paying the search fee.
Essential Terms in a Recruitment Client Contract
A professional recruitment fee agreement must clearly define commercial terms:
- Fee Structure and Payment Triggers: State the placement percentage (e.g., 20% to 30% of first-year base salary) or fixed fee, with clear invoicing triggers (e.g., invoice generated on the candidate's first working day, net 15 days).
- Candidate Ownership and Non-Circumvention: Explicit language stating that the agency retains candidate representation rights for twelve months from the date of submission, preventing the client from hiring the candidate later fee-free.
- Replacement and Guarantee Periods: Clear terms detailing prorated credit or replacement recruitment if the candidate resigns or is terminated for cause within 60 or 90 days.
Closing the Agreement Fast
- Send Contract Prior to Resume Release: When a hiring manager requests candidates, immediately send the digital agreement via e-signature.
- Highlight Key Terms: Encourage clients to sign on their phones so candidate presentations can begin without delay.
Defining Retained Search Milestones vs Contingency Invoicing
Recruitment agreements should clearly distinguish between contingent search arrangements (where fees are earned solely upon candidate placement) and retained executive searches (billed in milestone thirds: engagement launch, short-list delivery, and placement). Outlining clear invoice payment deadlines ensures positive agency cash flow throughout prolonged executive searches, while establishing candidate ownership rules that prevent clients from circumventing placement fees by delaying hire dates.
Recruitment agencies can use Undersign to execute professional fee agreements and terms of business with hiring clients, ensuring legal protection before resumes are transmitted.