Permanent Recruitment Terms of Business Explained

Reviewing Terms of Business (TOB) when engaging a recruitment partner can sometimes feel like wading through complex legal jargon. However, these documents are simply designed to set clear expectations and establish a fair commercial framework for both parties.

Terms of business should never be a barrier to partnering with a recruiter. While they are legally binding documents, the underlying concepts are straightforward once broken down.

This guide breaks down the core commercial and operational considerations within standard permanent recruitment terms, focusing specifically on how we work at Motion Recruitment on a contingent basis.

Commercial Considerations

Permanent recruitment focuses on identifying candidates for direct employment on your payroll. Contracting or temporary staffing agreements operate under a separate model.

When engaging Motion Recruitment on a contingent basis, the commercial model is simple: you only pay a fee if you successfully hire a candidate we introduce. There are no upfront fees to commence a search. While this provides a risk-free framework, it is important that hiring managers are genuinely ready to hire before kicking off a search to ensure candidate engagement remains high throughout the process.

1. Fee Calculations

In permanent recruitment, the placement fee is calculated as a percentage of the successful candidate’s Annual Remuneration Package (ARP).

  • What is included: Base salary, superannuation, and fixed cash-equivalent allowances (such as a guaranteed car allowance).

  • What is excluded: Variable or performance-based incentives, including discretionary bonuses, health insurance, and sales commissions.

For the vast majority of placements, the calculation simply applies to the base salary plus superannuation.

2. Payment Terms

Standard payment terms across the industry typically require settlement within 21 days from the candidate’s start date. Timely payment is essential, as meeting these agreed terms is generally a prerequisite for maintaining your replacement guarantee coverage.

3. Permanent Placement Guarantees

A core protection for employers is the replacement guarantee. Standard terms provide a 3-month guarantee period starting from the candidate’s first day of employment.

  • Free Replacement: If a placed candidate leaves of their own volition or is terminated for performance issues within the first 3 months, we carry out a replacement search at no additional search cost.

  • Exceptions: Guarantees do not apply if the role becomes redundant, if internal restructuring alters the position description significantly, or if the original placement invoice was not settled within the agreed payment terms.

  • Credit Notes: Because the sourcing work is fully executed upon placement, cash refunds are not standard practice. However, if a suitable replacement candidate cannot be sourced within an agreed timeframe, a credit note is issued for future use on a comparable vacancy.

Operational Considerations

Beyond the financial structure, terms of business outline the operational rules governing candidate introductions and ownership.

1. Candidate Ownership and Representation

When a recruiter submits a candidate CV or profile, that introduction is covered under the terms of business.

  • Representation Window: Candidate introductions are valid for 6 months. If you hire that candidate for any role within 6 months of their initial introduction, standard placement terms apply.

  • Internal Distribution: Forwarding a candidate CV to another internal hiring manager or department still falls under the original representation agreement.

  • Prior Interaction: If your organization is already actively interviewing or in discussions with a candidate prior to our referral, simply notify us promptly to clarify existing ownership.

2. Final Hiring Decisions

Recruiters act as partners to source, screen, and present the most suitable market talent. However, the final decision to engage a candidate remains entirely with the client. Employers retain full control over evaluating job requirements, setting internal selection criteria, and making the final job offer.

Key Takeaways

  • Contingent Sourcing: You incur no financial cost unless a candidate is successfully hired.

  • Transparent Calculation: Fees are based purely on fixed remuneration (base plus superannuation).

  • Built-in Protection: A 3-month replacement guarantee protects your investment if a new hire does not work out.

  • Simple Ownership Rules: Candidate introductions remain active for 6 months across your organisation.

Clear terms create a transparent foundation so both parties can focus on the main objective: securing the best technical talent for your business.