A Cardiff-based agency spends three weeks sourcing a project manager for a construction client in the Valleys, gets them through three rounds of interviews, and the client hires them. Four months later, the same candidate turns up on the client’s payroll directly, and the agency’s invoice for the introduction fee gets quietly ignored. This happens across every sector where Welsh recruiters place people, from NHS Wales health board contracts to Cardiff Bay tech roles, and in nearly every case it’s the Terms of Business document that fails to stop it.
My partner works in the PMO function at TEKsystems, one of the world’s largest IT staffing and managed services firms, so I hear a lot about how agency pipelines actually work day to day, not how they’re supposed to work on paper. The pattern holds regardless of sector or postcode. Agencies treat their Terms of Business as a formality to sign before work starts, not as the document that protects the fee once a client decides not to pay it. Most were drafted years ago, copied from a template, and never revisited. Below are the five clauses missing most often.
Define what counts as an introduction
Most Terms of Business say a fee is owed if the agency “introduces” a candidate who’s later hired. They rarely define introduction. Does a CV sent to a recruitment lead at a Welsh health board count? Does a name passed informally to a hiring manager at a Welsh Government contractor count? Without a definition, the client argues the candidate came through another route, and the agency has nothing on paper to point to.
The fix is a specific, evidenced definition: an introduction happens when the agency provides the client with the candidate’s CV, name, or contact details, or arranges an interview, whichever comes first, timestamped and logged against a named contact. Vague wording protects the client, not the agency.
Fix the fee crystallisation trigger
Many agreements say the fee is payable “on hire.” That sounds fine until a South Wales infrastructure client delays a start date past the introduction window, or places the candidate through a joint venture partner on the same Welsh Government contract. Each becomes grounds to argue the fee doesn’t apply.
The fee should crystallise on acceptance of an offer by the candidate, not on start date, and should extend to any role within the client’s wider group or contracting structure, not just the one originally briefed.
Close the backdoor hire gap
This is the clause missing most often, and it costs agencies the most money. A backdoor hire happens when a client waits out the introduction window, then rehires the same candidate directly once the fee liability has technically expired. It’s especially common in NHS Wales and local authority recruitment, where agency staff often convert to permanent posts once a budget line opens up at a health board or Cardiff Council.
The Conduct of Employment Agencies and Employment Businesses Regulations 2003 applies UK-wide, including Wales, and sets out how agencies must operate, but it doesn’t stop this on its own. Your contract has to. The fix is an extended liability period, typically 12 months from introduction, applying regardless of how the hire happens, direct, through another agency, or via a different entity in the client’s group.
Put a rebate schedule in writing
If a placement falls through in the first few weeks, most clients expect some money back, and most agencies expect to give some. The problem is when it isn’t written down. The client assumes 100% back, the agency assumes nothing owed, and the argument happens after the money has already moved.
A standard schedule works well: 100% rebate if the candidate leaves within two weeks, 50% within four, nothing after eight. Put it in the contract before the placement starts, not in an email once it’s gone wrong.
Reference the Late Payment Act
Invoices to public sector and construction clients routinely run past 30 days, and most Terms of Business say nothing about what happens next. Under the Late Payment of Commercial Debts Act 1998, businesses can claim statutory interest plus a fixed compensation fee on overdue commercial debts, even if the contract is silent on it. The compensation fee ranges from £40 to £100 depending on invoice size.
Most Welsh agencies don’t reference this at all, which means clients never expect to pay it and agencies rarely chase it. Naming it explicitly, with the specific interest rate and a reference to the Act, changes the incentive for the client to pay on time in the first place.
A day spent checking these five clauses against your actual Terms of Business costs nothing and needs no solicitor. What it takes is treating the document as functional, not decorative, whether you’re placing into a Cardiff Bay start-up, a South Wales construction firm, or a Welsh public sector framework. Most agencies never look at theirs again once the first client’s signed it. Do it this week, before the next fee dispute does it for you.
Irfan Dadabhai is the founder of LexPact, an AI contract platform for UK recruiters and freelancers.
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