Transfer fees: when can a recruitment agency actually charge one?

A transfer fee is what an agency can charge a hirer who takes on a temporary worker directly, or via another agency, within a defined period after the original assignment. It exists to protect an agency's commercial interest in a placement it sourced and vetted — but it's only chargeable where the terms allowing it were properly set out in advance.

Under the Conduct Regulations, a hirer must be given the option of an extended temp-to-perm period instead of paying the fee outright, and the terms of when a fee applies — and how it's calculated — need to have been agreed with the hirer before the assignment started, not introduced retroactively once a hirer expresses interest in hiring the worker directly.

Pure temp vs temp-to-perm — why the distinction matters here

A placement that was always intended as temp-to-perm from the outset should have transfer terms baked into the original agreement with the hirer — including, ideally, an agreed extended-hire period the hirer can use instead of paying a fee. A pure temp placement that later, unexpectedly, turns into a hirer wanting to employ the worker directly is a different situation: the transfer fee terms still need to have existed in the original hirer agreement, even though nobody was thinking about a permanent hire at the time. This is exactly why transfer fee clauses belong in every hirer agreement as standard, not just the ones flagged as likely temp-to-perm from day one.

How a transfer fee is usually structured

• –A defined time window after the assignment ends (or after it started, depending on the agreement) within which a direct hire triggers the fee
• –A calculation basis — commonly linked to the placement's charge rate or the worker's salary — agreed in advance, not decided when the fee becomes due
• –An extended-hire alternative the hirer can choose instead of paying outright
• –Clarity on what counts as "taking on" the worker — direct employment, but also engagement via a different agency to sidestep the fee

What happens when a hirer disputes the fee

Disputes tend to arise when a hirer's terms were vague, or when the timeframe for a chargeable transfer wasn't clearly communicated. Getting this right at the point terms are agreed — as part of the same discipline that applies to a solid work seeker's agreement — avoids a much harder conversation later. Where a dispute does arise, the agency's position is only as strong as the paperwork: an agreement that clearly stated the window, the calculation, and the extended-hire option is a straightforward conversation. An agreement that gestured at a fee without specifics is a weak negotiating position, whatever the underlying principle says.

Common mistakes agencies make with transfer fees

• –Not including transfer fee terms in hirer agreements for placements that weren't originally expected to convert to permanent.
• –Leaving the calculation basis vague — "a reasonable fee" rather than a defined formula or figure.
• –Failing to offer, or failing to document offering, the extended-hire alternative.
• –Trying to introduce or increase a fee after a hirer has already expressed interest in hiring the worker directly, rather than relying on terms set at the start.

Multi-client and multi-role assignments add another wrinkle: if the same worker has been supplied to more than one hirer, or has moved between roles at the same hirer, it's worth being explicit about which assignment the transfer fee terms actually attach to, rather than assuming it's obvious from context once a dispute is underway.

A worked scenario

A worker is supplied to a hirer for what's expected to be a short cover assignment. Three months later, the hirer likes the worker enough to want to bring them on permanently. If the original hirer agreement included a clear transfer fee clause — a defined window, a stated calculation basis, and an extended-hire alternative — this is a straightforward commercial conversation: the hirer either pays the fee, extends the temporary engagement for the agreed period, or negotiates within the terms already on record. If the original agreement never mentioned a transfer fee at all, because nobody expected the assignment to lead to a permanent hire, the agency has essentially no enforceable position — the fee can't be introduced retroactively just because the situation changed.

Why hirers sometimes push back even with clear terms

Even where the terms were properly agreed upfront, hirers occasionally query a transfer fee simply because enough time has passed that nobody on their side remembers signing up to it. This is where good record-keeping does double duty — the same signed hirer agreement that makes the fee enforceable also makes the conversation faster and less adversarial, because there's no ambiguity to argue about. Agencies with weak record retention on hirer-side paperwork tend to have the longest, most drawn-out transfer fee disputes, independent of whether they were entitled to the fee in the first place.

What a fair extended-hire alternative actually looks like

The extended-hire option isn't just a box to tick alongside the fee — for many hirers it's genuinely the more attractive route, since it avoids an upfront cost and lets them evaluate the worker further before committing. A well-structured hirer agreement sets out a specific period — a defined number of weeks of continued temporary engagement — after which the hirer can take the worker on directly without a fee. Leaving this vague, or presenting it as a token alternative nobody's expected to actually take, undermines the agency's position if a hirer later argues the fee was effectively the only real option they were offered.

How this interacts with a wider onboarding and terms process

Transfer fee clauses shouldn't be treated as a special, occasional addition drafted only for placements that look likely to convert — they belong in the standard hirer terms used for every assignment, as part of the same discipline that governs a solid work seeker's agreement on the candidate side. Placements that look purely temporary at the outset are exactly the ones most likely to catch an agency out later if the fee terms were never included, because nobody thought to negotiate them in.