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Glossary

Glossary for recruitment agencies: 14 terms in plain English

Each definition is taken from one of our guides, which gives the rule in full and where it comes from. The terms are in alphabetical order.

Engagement

In an agency's terms, any way the client takes the candidate on: employment, a contract for services, through a third party, in any capacity, by the client or an associated company. A client who takes the candidate as a contractor through an umbrella has made an engagement, and the fee is due.

Full guide: Recruitment agency terms of business: the clauses that decide fee disputes, and how to prove the client accepted them

Source: Our own drafting notes; the definition is a contract term, not a statutory one

Equal treatment

What an agency worker is entitled to from the first day after twelve qualifying weeks: the same basic pay, overtime and shift rates, bonuses tied to their own work, holiday entitlement, rest breaks and working time as a direct recruit doing the same job.

Free tool: Agency worker 12-week rule calculator: when equal treatment starts, and which breaks pause or reset the clock

Source: Agency Workers Regulations 2010, regulations 5 and 6

Extended period of hire

The alternative to a transfer fee that an agency's terms must offer. The agency carries on supplying the worker for the extended period at its normal margin, and at the end the hirer may engage the worker with no fee. The extension cannot be on worse terms than the original assignment.

Free tool: Temp-to-perm transfer fees: the regulation 10 rules on eight weeks, fourteen weeks and the extended-hire option

Source: Conduct Regulations 2003, regulation 10

Fair Work Agency

The enforcement body that opened on 7 April 2026, combining the bodies for the minimum wage, employment agency standards and the gangmasters licence. For agencies it enforces the Conduct Regulations, holiday pay and statutory sick pay, with powers to inspect and to issue penalties.

Full guide: Employment Rights Act 2025 dates for recruitment agencies: what changed in April 2026, what comes in October and 2027

Source: Employment Rights Act 2025; GOV.UK implementation timetable

Fee-payer (IR35)

The business that pays a contractor's limited company, which is usually the agency. A medium or large client decides the IR35 status, but the fee-payer runs the payroll deductions. On an £8,000 monthly fee an inside decision costs the agency £1,137.45 in employer National Insurance that cannot be deducted from the contractor.

Full guide: IR35 for recruitment agencies: who decides status, what the fee-payer owes, and the umbrella rule since 6 April 2026

Source: GOV.UK, Fee-payer responsibilities under the off-payroll working rules

Introduction period

The time after a candidate is introduced during which a fee is due if the client engages them, typically twelve months. Shorter periods lose fees to candidates who are found again months later; longer ones are harder to defend.

Full guide: Recruitment agency terms of business: the clauses that decide fee disputes, and how to prove the client accepted them

Source: Our own drafting notes; the period is a contract term, not a statutory one

Key Information Document (KID)

The document an agency must give a temp before they agree terms. It must be separate, no more than two sides of A4, and carry a worked pay example. Since 7 April 2026 it has to give contact details for the Fair Work Agency.

Full guide: Key Information Document for agency workers: what regulation 13A says it must contain, a template to copy and the April 2026 change

Source: Conduct of Employment Agencies and Employment Businesses Regulations 2003, regulation 13A

Qualifying weeks (12-week rule)

The weeks an agency worker counts towards equal treatment in the same role with the same hirer. A break of six weeks or less pauses the count; a break of more than six weeks starts it again. A worker who started on 6 July 2026 with a three-week gap reaches equal treatment on 19 October 2026.

Free tool: Agency worker 12-week rule calculator: when equal treatment starts, and which breaks pause or reset the clock

Source: Agency Workers Regulations 2010, regulation 7

Rebate scale

The share of a permanent fee an agency refunds if the candidate leaves early, set out by week. On a £6,840 fee with a 100/50/25 scale, a candidate who leaves in week 6 earns the client a £3,420 rebate.

Free tool: Recruitment fee and rebate calculator: the invoice, the rebate scale with dates, and whether a temp-to-perm fee is chargeable

Source: Our own arithmetic, in tests/talentwright/tools-check.txt

Right to work check

The check an employer makes before a worker starts. A British or Irish passport takes a manual or IDVT check and never needs repeating. An eVisa or time-limited visa takes the Home Office online check with a share code. A missed check can cost up to £45,000 per worker for a first breach.

Free tool: Right to work check router for recruitment agencies: which check, what to keep, when to check again

Source: Home Office, Employer's guide to right to work checks

Share code

The code a worker gives an employer so it can run the Home Office online right to work check. The employer keeps the result page for two years after the engagement ends.

Free tool: Right to work check router for recruitment agencies: which check, what to keep, when to check again

Source: Home Office, Employer's guide to right to work checks

Status determination statement (SDS)

The written IR35 decision a public sector or medium or large client must give, with reasons, to the worker and to the party it contracts with, which is the agency. The agency should ask for it before the assignment starts and file it with the date it arrived.

Full guide: IR35 for recruitment agencies: who decides status, what the fee-payer owes, and the umbrella rule since 6 April 2026

Source: GOV.UK, Understanding off-payroll working (IR35)

Temp margin

What an agency keeps from each hour a temp works: the charge rate less the pay rate and the employer's costs. A temp paid £13.50 an hour costs £17.37 once holiday pay, employer National Insurance and pension are added, so a £19.50 charge rate leaves £2.13, which is 10.9%.

Free tool: Temp margin calculator: the true cost of a temp's hour and what is left of your charge rate

Source: Our own arithmetic, in tests/talentwright/tools-check.txt

Transfer fee

The fee an agency charges when a client takes a temp on permanently. Regulation 10 allows it only if the terms offered an extended period of hire as an alternative, and only if the hire comes before the later of eight weeks after the assignment ended and fourteen weeks after it started.

Free tool: Temp-to-perm transfer fees: the regulation 10 rules on eight weeks, fourteen weeks and the extended-hire option

Source: Conduct of Employment Agencies and Employment Businesses Regulations 2003, regulation 10

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AEO Lookup editorial team

We write practical guides for people who run small UK firms, and we check every fact against its source on the date shown. Read how we review, or tell us if something has changed.