Guide
Recruitment rebate periods: what happens when a hire does not stay
Updated
Every agency will tell you they offer a rebate. The length is the part employers ask about and the exclusions are the part that decides whether it is worth anything.
The two shapes
- Sliding scale rebate
- A proportion of the fee is refunded if the placement ends within a defined period, with the proportion falling the longer the person stayed. Cash back, on a scale.
- Free replacement
- The agency runs the search again at no further fee rather than refunding anything. Better where you still need the role filled, worse where you have decided not to refill it or have lost confidence in the supplier.
Neither is standard and nothing requires an agency to offer either. Lengths vary widely between agencies and between sectors, so the term is a matter for negotiation rather than something to assume. Ask for it in writing and read what it excludes.
The exclusions are the clause
- Redundancy or a change of plan on your side. Almost always excluded, and reasonably so, but check how widely the exclusion is drawn.
- Resignation versus dismissal. Some terms cover only one. A rebate that does not apply when the person simply leaves covers the outcome employers most often experience.
- Payment of the original invoice on time. Late payment frequently voids the rebate entirely. This one catches finance departments rather than hiring managers.
- Notification deadlines. A requirement to notify the agency within a short window of the person leaving, failing which the rebate lapses.
- Replacement instead of refund at the agency's option. If the choice is the agency's rather than yours, a sliding scale rebate is not what you think you have bought.
When the period starts
Check whether the rebate period runs from the acceptance of the offer or from the actual start date, since a long notice period can consume a meaningful part of a short guarantee before the person has worked a day. Also check when the invoice falls due relative to the rebate period: paying in full before any of the guarantee has run is common and is a negotiable payment term rather than a fact of life.
What to ask for instead of a lower fee
- A longer rebate period, expressed to run from the start date.
- Cover for resignation as well as dismissal, spelled out.
- Your choice between rebate and replacement rather than the agency's.
- A notification window long enough to be practical.
- Payment terms that do not fall due before a meaningful part of the guarantee has run.
Nothing in the Employment Agencies Act 1973 or the Conduct Regulations 2003 requires an agency to offer a rebate or sets its length. This is purely a commercial term, which is exactly why it is worth negotiating.