Recruitment agency fee disputes – are you the effective cause?

You may be finding yourself more and more in situations whereby you introduce a candidate and hear nothing more, only to realise that your candidate has been taken on some months later supposedly placed by another agency. The client is not going to want to pay for 2 agency fees, so what can you do to make sure you get your fee?

It’s not always the case that the Agency that introduced the candidate first is successful and gets their fee paid. If this was the case, you could imagine a situation whereby all an Agency would have to do is to send out chance CVs in bulk with their terms and conditions attached.

You could however find yourself in a situation whereby the first Agency sent a speculative CV to a client’s general email address, or to someone who isn’t responsible for hiring. In these circumstances it would be hard to argue that the sending of that email (that may never have been acknowledged) should surpass another Agency who have been more proactive in arranging interviews and negotiating terms with the candidate.

In these sorts of scenarios, you can see how the Courts are generally reluctant to accept the “first to introduce” rule. Instead, the Courts adopt the “effective cause” principle. It’s worth mentioning that this principle is also seen in other Agency type relationships, for example estate agents’ contracts.

The Court would look for which Agency played the effective role in the ultimate employment of the candidate. This is the more logical and practical approach. The “effective cause” approach will depend on the individual facts of each case, so there is not always a simple and obvious answer until the background is fully considered. However, it is understandable that the Courts will not want to award a fee to an Agency when it has simply distributed a CV and done nothing else, whereas the other Agency had gone above and beyond to ensure the engagement of the candidate with the client. The Agency that has been pro-active in effecting the engagement will usually be the one that gets their fees paid.

So, how do you make sure you are the effective cause?

It goes without saying that you need well drafted Terms and Conditions which ideally provide for a clause dealing with the “effective cause” principle. It is crucial that the Agency ensures that their Terms are properly incorporated in a binding contract with the client at the outset and ideally before CV’s are circulated. If terms are not sent until much later in the relationship, this can lead to problems when trying to prove incorporation of terms.

I would always suggest that you ensure that any candidate introduction is followed up with the client promptly, offer and try to set up interviews, and essentially do as much as you can to manage the whole recruitment process of a candidate. Ensure that telephone calls are followed up with emails confirming the stage that has been reached and what work has been completed so far on behalf of the client. This is the best way to ensure you get paid. Showing to the Court that you have worked for your fee will always be looked upon in a positive light.

To summarise, before you chase a back door fee, make sure the client has had sight of your terms and conditions and agreed them. Make sure your terms have the relevant clauses to successfully claim an introduction fee whatever role the candidate is engaged in or regardless of by whom they are introduced. Make sure you can document everything you did to capture the engagement of the candidate by the client. Due to the individual circumstances surrounding any contract dispute, it is vital to discuss your situation with a lawyer so you can be provided with sound advice as to what options are available. Please do not hesitate to contact a member of the Debt Recovery team for more information.