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UKSolicitorJA, Solicitor
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The contract shown below is between a Recruitment Agency and

Resolved Question:

The contract shown below is between a Recruitment Agency and their Client. The Recruitment Agent sends candidate CVs to the Client and a 25% fee would be due if the Client hires the candidate. The terms of business essentially boil down to ‘a payment would be due for 25% of base compensation, if someone was hired by the client’.

However, I wanted to know if ‘A fee of 25% of the first years base compensation’ can be applied to an Interim hire, given Interims are usually paid a daily rate and not a ‘base’? I have never worked in interim and I am not even sure if Interims ever get paid a base.

To provide some context, I am taking my former employer (the Recruitment Agency) to tribunal for constructive dismissal. They employed a recruitment consultant to provide interim candidates to our clients. However, the new person was encouraged to send out these terms and I contest that they have any relevance to Interim provision as Interims are not paid ‘base’ salaries, and instead I claim that these terms are indeed terms for provision of permanent staff only, given they refer to ‘base compensation’. Am I right?

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XYZ LTD Contingency Agreement

This agreement covers the provision of services on a contingent basis by XYZ Ltd to CLIENT1.

Methodology - What we will do
Carry out a discreet search to identify and contact individuals whose experience and abilities may meet the specification in the Assignment Brief.

Receive and screen applications or expressions of interest from potential candidates, discuss the job description and person specification with them and, where appropriate, conduct interviews to assess their suitability for the Post.

Present recommendations to the Client who, in the opinion of the consultant, meet the person specification and other criteria defined in the Assignment Brief.

Make all necessary arrangements for interviews between the Client and short-listed candidates.

Handle any relevant correspondence and communication with and between Client and candidates until an offer of employment is made to one of the short-listed candidates to join the Client.

Assist in negotiation(s) of offer and acceptance and then maintain contact with the successful candidate until and following commencement of employment.


Fees, Costs and Conditions
A fee of 25% of the first year’s base compensation of the appointed candidate will be payable to XYZ Ltd by the Client in consideration of XYZ Ltds’ work in undertaking the assignment. This fee is invoiced and payable upon the first day of employment of the placed candidate with the Client.

The Client remains responsible for taking up references, confirming academic or professional qualifications, for arranging any medical examination or other investigation of any potential employee, and for obtaining work or other permits where these are required.

XYZ Ltd and its employees will have no liability to the Client for any loss, damage, delay or compensation of any kind, whether in contract or tort, arising from this Agreement. Without prejudice to this, XYZ Ltd’ liability will in any event, other than for death or personal injury arising from our own negligence, be in respect of the Client’s direct losses only and be limited to a sum equivalent to the fees payable for the assignment.

Payment
All invoices to the Client are subject to VAT at prevailing rates and are payable in full within 14 days of presentation. In line with The Late Payment of Commercial Debts (Interest) Act 1998 and The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, XYZ Ltd reserves the right to charge interest, at 8% over the official dealing rate of the Bank of England, from the date of invoice, on all invoices not settled in full within 30 days of invoice date.

Variation and Jurisdiction
XYZ Ltd and the Client warrant that there has been no prior agreement to the terms of this agreement. XYZ Ltd reserves the right to allocate the consultant(s) it considers most appropriate to fulfil its obligations under this agreement. No variation of the terms of this agreement will be binding unless it is made in writing and signed on behalf of both XYZ Ltd and the Client by duly authorised signatories. The terms and conditions of this agreement are to be interpreted in accordance with English Law and the parties agree to submit to the jurisdiction of the English Courts in the event of any dispute that cannot finally be resolved amicably between them.

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Submitted: 1 year ago.
Category: UK Employment Law
Expert:  wendy-Mod replied 1 year ago.
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Customer: replied 1 year ago.

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Expert:  Fran-mod replied 1 year ago.
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Expert:  UKSolicitorJA replied 1 year ago.
Hello,

I am a Solicitor who has previously worked in-house in a recruitment agency.

The problem here is that the terms and conditions you set out do not define a candidate and as such, it could cover both perm staff as well as temps/interims.

Your ex- employer could argue that the fee payable to them for interims is a separate matter and although their terms are not very clear, they could decide on a case by case basis depending onn the duration of the interim's assignment and their remuneration.

The tribunal/court will have the final say, I can only give you my opinion and it could go either way for you, although your argument is not entirely correct in my opinion.

Hope this helps-please leave feedback

Customer: replied 1 year ago.

Thank you for your response.


 


I agree that the term 'candidate' applies to perm or interim candidates. However my concerns are around the word 'base' in the contract (ie 'A fee of 25% of the first year’s base compensation of the appointed candidate').


 


My understanding of interims in that they usually get paid a daily rate (ie £900/day). I am looking to argue that they never get paid a 'base' and therefore this contract does not apply to Interims (ie they never get paid terms along the lines of '£50,000 for 6 months').


 


Am I right in assuming that Interims dont ever get paid a base?

Expert:  UKSolicitorJA replied 1 year ago.
Correct, interims are usually paId a daily rate as opposed to an annual sum but the term base compensation can mean the interims compensation (i.e. daily rate) for the year.

Base is a generic term and does not mean that it only applies to perms as such I am afraid.

You may try and argue your point nevertheless but my opinion does not support your argument.

All the best-please leave feedback

Customer: replied 1 year ago.

Thank you. One last point of clarification- Does 'Base Salary' imply that its a permanent employee rather that a contractor/interim by virtue of the word 'salary'?

Expert:  UKSolicitorJA replied 1 year ago.
You may argue that is the case, but I believe you used the term base compensation previously.

Please leave feedback
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