Recruitment Agencies: the Battle for Introduction Fees – Part 2

We recently advised a recruitment candidate client in connection with a dispute over an introduction fee where the recruitment agency had introduced a candidate but the candidate was not hired at that time. Around 8 months later, the client company contacted the candidate directly in relation to a very similar role and, following an interview process, the candidate was hired.

The recruitment agent sought payment of its introduction fee on the basis that it had originally introduced the candidate to the client company. The recruitment agency argued that it was the ‘effective cause’ in the eventual hiring.

The client company referred to its terms of business which contained a clause to the effect which limited the entitlement of agencies to recover an introduction fee if the hire was not made within six months of the introduction. This hire was made after that period had expired and so the recruitment agency was not entitled to its fee.

Our advice for recruitment agencies:

• Watch out for time limitations on introduction fees in your client’s standard terms! If the terms are properly incorporated into an agreement between the agency and client, you are likely to be bound by them.
• There is some limited scope to challenge the unfairness of certain standard terms between businesses but this is usually only in circumstances where the clause limits liability or has a similar effect.
• If it cannot be challenged, then it may be arguable that the terms were not properly incorporated into the agreement but this will depend on the circumstances. If it was not drawn to your attention when the contract was made, this may be relevant.
• It may also be arguable that a particularly onerous clause in one party’s standard terms should be interpreted strictly against that party, but that will only be of use if the clause is ambiguous.
• Our best advice is to ensure that you are clear at the beginning of entering into a relationship with a client company, what terms (if any) govern that relationship and ensuring that your recruitment agents are clear on how a binding agreement can come into being.