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What does a good recruitment rebate policy look like?

Whatever route you take to hiring, bringing new people into your team is an inherently uncertain business. Appointments can fail to work out as you’d hoped for many reasons and often it’s through no fault of any particular individual.

That being said, it never fails to suck when it happens. You’ll lose time on training and development; you’ll have to spend more time, effort and expense hiring again, and if your failed hire was made through a recruitment consultancy, you’ll also have spent a fair chunk of cash on that service.

When you hire a member of your team through a recruitment consultancy the fee level and structure that you will pay varies as a function of the specific service you have received. So too does the structure and level of rebate or refund that you can reasonably expect.

Regardless of the service though, there should always be a fair and transparent financial recourse for you when things don’t work out.

Here’s what you should expect from the 2 most common types of service offered by recruitment businesses: Contingency (no-win-no-fee) and Retained (i.e. headhunting). We’ll cover RPO (Recruitment Process Outsourcing) and how that works in a separate article.

Contingency Recruitment:

The reason I’m covering Contingency services first is that it is the service that most businesses are familiar and experienced with. Basically, Contingency means no-win-no-fee. In other words, you only pay the recruitment consultancy a fee if you hire one of their candidates.

This service is designed to augment your hiring efforts with additional relevant applicants and hopefully, a higher level of quality.

It is not a dedicated headhunting service and cannot contain the same high level of candidate assessment that retained services do. For numerous reasons.

For contingency services you should reasonably expect a refund period that covers at least your businesses contractual probationary period. In short, if a candidate doesn’t work out and leaves during their probationary period, you should get some level of refund.

This refund usually reduces on a pro-rata basis the further the candidate progresses through their probationary period. For example, if the new hire leaves after a week you may get a 70% refund (it should be 100%!), whereas if they leave in week 12 you may only get a 10% refund.

The reason why the rebate period typically follows the probationary period is that it is a reasonable point at which to say that you are satisfied with the employee you have hired. When an employee passes their probationary period, you as an employer are saying that you are happy with their appointment and are willing to make them a ‘permanent’ member of staff. If it doesn’t work out after that, it’s not particularly reasonable to claim that you are unhappy with the candidate that was introduced to you.

As the average probation period in the UK for salaried positions above £25,000 per year is 3 months, the average refund period from recruitment businesses is likewise: 3 months or 12 weeks.

If the recruitment business you are thinking of working with does not offer at least this level of refund period, go and speak with other providers. You will get more favourable terms out there.

However, do not expect recruiters providing a contingency service to give you 6 months 100% refund terms. It’s simply not worth the risk for them.

Retained Recruitment:

Retained Search, or headhunting, is a much more in-depth recruitment service than a contingency arrangement.

In simple terms, you are retaining a specialist recruiter to identify, assess and present candidates who are ideally suited to your particular requirements. You pay a fee upfront to secure the level of service required and you pay further fees at later stages in the process as success milestones are reached. You can find out more about what that looks like here.

Because of the depth of service, and the potential for higher costs, it is reasonable to expect a more comprehensive and longer lasting refund or replacement policy from your supplier.

Strangely though, most suppliers offer little more than the probationary period cover typical of a contingency assignment. Don’t accept this. While nothing that involves human free will is ever 100% certain, following a retained search process, both yourself and your recruiter should be far more confident that the eventual hire will be a success. This is largely due to the depth of assessment that candidates go through before they are even presented for consideration. This should be backed up and reflected in the refund and replacement policy. We offer a 12-month placement guarantee on retained assignments, for example. That’s pretty much unheard of in the market, but it is there to give piece of mind to our clients and reflects our confidence in the candidates that we select and present, following our rigorous process.

Don’t settle for poor refund and replacement policies on retained assignments. There is always scope for discussion.


Refund, replacement and guarantee periods in recruitment assignments are important. Hiring is seldom cheap, and as with all areas of human interaction, there is always a risk that things won’t work out. Before signing terms on a recruitment assignment, make sure you are happy with the coverage. But be reasonable. Reflect on the level of service that you are acquiring. If you’re just getting a recruiter to share CVs with you on a no-win-no-fee basis for the lowest fee possible, don’t expect a particularly brilliant rebate policy. On the other hand, if you have invested in a dedicated search service, you should be able to demand greater clawbacks if it doesn’t go to plan.

Whatever route you take, have the discussion up front and make sure you are satisfied before you proceed. This will give you confidence in the assignment and help you to avoid disappointment in the unlikely event that your hire doesn’t work out.

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