Setting up · Lesson 8 of 18 · 9 min
Four clauses in this document decide whether you actually get paid. The rest are worth having and rarely change an outcome. This lesson is about knowing which is which — before a client’s procurement team hands you their version.
One thing to say plainly at the start: we are not a law firm and this is not legal advice. What follows is what these clauses do commercially, which is a different subject from what the law requires in your state — and staffing is regulated differently across states. Take the document to an attorney once. This lesson is so that when you do, you know what you are asking about.
The client agreement, signed once
Also called terms of business or a services agreement. This is the master document per client: fees, guarantee, ownership, payment terms, liability, termination. Signed before you submit anybody, and reused for every role after that.
A job order or assignment confirmation, per role
Short, and the one most agencies skip. It confirms the specific role, the salary or charge rate, the fee that applies and any client-specific requirements. It exists so that nobody can later remember a different number.
The worker-side agreement
What you sign with the person. For contract placements this is an employment contract, because you are the employer of record. For permanent placements it is usually a shorter terms-of-representation document.
Vendor onboarding paperwork
Whatever the client’s procurement process requires: a W-9, certificate of insurance, banking details, sometimes an NDA, sometimes their own master services agreement in place of your terms. Start this early; it routinely takes longer than the search.
Ranked by consequence rather than by the order they appear in the document.
Protects: The size of every invoice you will ever send this client.
A percentage means nothing until the contract says what it is a percentage of. Base salary only, base plus guaranteed bonus, or total first-year cash are three materially different numbers on the same placement. Pick one, define it in a sentence, and the most common invoicing dispute in recruitment stops being possible.
Protects: Being paid for a candidate the client hires four months later.
States that a fee is payable if the client — or any company in its group — engages someone you introduced, within a defined period of the introduction, whether or not it is for the original role. Without it, an introduction is a gift and the argument afterwards is unwinnable. Include the group-company wording: hires frequently land in a sister entity.
Protects: How long your money sits with someone else.
When the invoice becomes payable — normally the start date — and how many days the client then has. Add a line requiring the client to give you any purchase order number before the first invoice, because in larger organisations an invoice without one is not merely late, it is invisible.
Protects: Your fee when a placement does not stick.
The remedy, the window, and the conditions. Replacement rather than refund keeps money you have already spent earning. Condition it on the invoice being paid in full and on prompt written notice, and exclude departures that are not failed placements — redundancy, restructure, changed duties, the client failing to do what it agreed.
Protects: The value of a contractor a client wants to keep.
For contract placements: what the client pays to take your worker onto their payroll, and for how long after the assignment the restriction applies. A flat fee, a percentage, or a scale that reduces with tenure. Agree it before anyone asks, because a conversion request with no clause is a negotiation you will lose.
Protects: You, when something the client did causes the problem.
Telling you when an offer is made and what was actually agreed. On contract work: supervising the worker, site safety, providing equipment, reporting incidents, and giving notice before ending an assignment early. These are also what your guarantee exclusions hang on.
Protects: You, from the most expensive mistake in contract staffing.
States who employs the worker and who is responsible for payroll, employment taxes and insurance. Worth being explicit even when it seems obvious, because classification and co-employment are where new agencies get hurt and the contract is the first document anyone reads afterwards.
Protects: The size of the worst possible day.
Caps your exposure — commonly at fees paid in a recent period — and excludes indirect and consequential loss. For contract staffing, also address who is responsible for the acts of a worker under the client’s direction and supervision.
Protects: Candidates, and your standing with them.
That candidate details go no further than the client, that both sides handle personal data lawfully, and that breaches get reported. Increasingly asked for by clients as standard, and it costs nothing to offer first.
Protects: The fees owed after the relationship ends.
How either side ends the arrangement, and — the part that matters — what survives it. An agreement that terminates cleanly should still oblige the client to pay for candidates introduced before termination who are hired afterwards, and should let assignments in progress run out on the same terms.
Check yourself
You place a candidate. Four months later the same client hires a different candidate you introduced during that search, into a different role. Are you owed a fee?
A client’s procurement team sends their own master services agreement instead of signing yours. What is the first thing to check?
Free tool
We have a contract generator that drafts any of these three agreements with your own fee, guarantee, conversion and payment terms written in — free, no signup, downloadable as Word or PDF.
Most clients of any size will come back with changes. That is normal and it is not an attack — their legal team is doing its job. What matters is knowing which changes cost you money and which are noise.
They want longer payment terms
Concede carefully and price it. On a perm desk it delays cash; on a contract desk it directly increases the payroll you finance, so a jump from thirty to sixty days is a real cost rather than an administrative preference. If you give it, ask for something — a higher charge rate, exclusivity, faster timesheet approval.
They want a refund instead of a replacement
Hold this one if you can. The search work is not returnable, and a refund clause makes you carry hiring risk you do not control. A reasonable middle is a replacement search with a pro-rata credit only if you cannot produce a replacement.
They want the ownership period shortened
Negotiable, within reason. Going from twelve months to six is usually survivable; going to sixty days effectively removes the clause, because a hire that lands in the following quarter is common and entirely legitimate.
They want their own master services agreement instead
Normal with larger clients and not a red flag. Read it for the four clauses that decide whether you get paid — fee basis, ownership, invoicing trigger, guarantee — because their template will have been written to protect them and may simply be silent on things your document covered.
They want to remove the late payment interest
Cheap to concede and rarely worth fighting over. It is enforced far less often than it is written, and trading it away early buys goodwill for the clauses that matter.
They want unlimited liability, or an uncapped indemnity
This is the one to escalate rather than accept. An uncapped indemnity attached to a one-off placement fee is a risk out of all proportion to the revenue, and it is the clause most worth paying an attorney to look at.
The pricing side of these clauses — how to choose between the fee models and how to ask for the number in the first place — is in the perm fees lesson. The guarantee, and the check-in schedule that stops you ever having to honour it, is the last lesson of the course. And when you are ready to produce the document itself, the contract generator drafts it with your terms already in place.
Key takeaways
The agreement between a staffing agency and its client setting out how the agency will be engaged and paid. For permanent placement it covers the fee and how it is calculated, when it is invoiced, the guarantee if the placement does not last, and how long the agency owns an introduction. For temporary and contract staffing it also covers charge rates, timesheets, assignment terms, who employs the worker, and what happens if the client wants to hire that worker directly. It is normally signed once per client and then relied on for every role after that.
The parties and effective date; the services; the fee and precisely what it is calculated on; invoicing trigger and payment terms; a guarantee clause with its conditions and exclusions; ownership of candidate introductions; each party’s obligations; confidentiality and personal data; limitation of liability; term, termination and what survives it; and governing law. For contract staffing, add charge rates, overtime, timesheet approval, employer-of-record status and conversion fees.
You need one to review it, which is not the same as paying for a draft from scratch. Starting from a structured template and taking that to an attorney is considerably cheaper than an hourly draft, and you only do it once — the reviewed document then becomes your standard terms for years. Staffing is regulated differently across states and employment law varies, which is why a generic template alone is a starting point rather than a finished contract.
Before you submit a single candidate. Your leverage is at its highest before the client has seen someone they want, and it collapses the moment they have. An agency chasing signature on terms while the client is already interviewing your candidate is negotiating from the weakest position available, and it is a self-inflicted one.
The provision stating that a fee is payable if the client engages someone you introduced within a defined period of the introduction — commonly six to twelve months — whether or not it is for the role they were originally introduced for. Good drafting extends it to companies in the client’s group, because hires frequently land in a sister entity. Without this clause, an introduction is a gift and there is nothing to point at afterwards.
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