On one of our recruiting forums, a member recently asked about guarantee and refund policies that other recruiters use in contracts with clients. Fall-offs / replacements are rare, but it can definitely put a dent in the cash flow to give back those hard-earned dollars.
The most common guarantee that we see offered is a 90-day replacement or refund, but recruiters use varying procedures.
Here are other various guarantees that our members use:
- 30-45 days to find a replacement
- Refund if unable to replace – If the firm is unable to find a replacement after a 45-day period, the client gets a refund
- Credit guarantee — “If a candidate fails to complete the 3 months’ warranty period, we are given exclusively 1 month to replace. If unsuccessful, then we credit 50% of the fee against future work.”
- Prorated refund – “If the fee has been paid, the placement is guaranteed on a pro-rated basis for 90 days (1/3 of the fee for each 30-day period)”
- No refund once paid – “In my view, you have earned the fee yet owe some kind of guarantee to your client, of course. Your client needs the new candidate to fill the vacancy and should allow you the opportunity to do so in an agreed amount of time. If that replacement cannot be found in that length of time some portion of the paid fee could be credited toward a future placement with the client, not a refund check issued.”
- Guarantee only if the invoice is paid within 10 days – “Payment terms shall be net 10 days with invoices submitted on the new employee’s first day of employment. If the fee has not been paid in 10 days, no guarantee will be in place.”
- One-time replacement guarantee – “I have seen some where the guarantee only applies once per search … so if the replacement candidate ALSO doesn’t work out, no guarantee on that.”
- Whatever the client says – Requires a great deal of trust and respect, and a solid longterm relationship with the client
What guarantees and/or refunds do you and your firm offer? Have you had to change your guarantee policy due to a situation with a client? Have you ever turned down a job order or client due to a refund clause in the contract?
90 day replacement guarantee- no refunds whatsoever. No exceptions other than extending the guarantee period to 180 days.
Replacement guarantee clause:
If the firm’s candidate’s employment is terminated due to clinical skill, work habits, communication and/or inappropriate interpersonal skills within the first 90 days of employment (with the exceptions of reorganization, elimination of position, takeover or material change in job responsibility,) the firm will recruit a suitable replacement candidate without any additional fees due.
If we are unable to recruit an acceptable replacement candidate within a reasonable time frame, we will provide another candidate, for a different position to that client. The replacement candidate will be of equal value to the original candidate. If the replacement candidate is of greater value, the client’s fee will be equivalent to the difference between the first candidate’s placement fee and the agreed upon fee with the client for all candidate placements, ($_______ (flat fee) or ______ % of candidate’s first year’s base salary.)
This guarantee is contingent upon the firm receiving the full placement fee within 10 days of the candidate’s first day of employment. If the fee has not been paid within 10 days, no guarantee will be in place.