How does a Recruiters Rebate policy work?

How does a Recruiters Rebate policy work?

What exactly is a Rebate policy though?

A rebate policy is effectively a refund policy for a permanent hire taken from a recruitment agency in the instance that they don’t work out. Imagine you buy an expensive item like a new car. You will want some form of safety net in case it goes wrong. Therefore, any reputable recruitment agency will have a Rebate Policy in place to protect you.

How does a Recruiters Rebate policy work?

A rebate policy will typically work by giving you a guarantee period that if the candidate leaves within a set period of time then you will be given either a refund, partial refund or replacement candidate.

If you hire a candidate and pay the recruiters fee within the invoice period and that candidate is fired or leaves you then the rebate comes in play.

What does a typical Rebate policy look like?

A typical rebate policy lasts for between a month and 3 months. A Rebate Policy can be extended for up to 6 months. Also, a rebate is broken into a sliding scale and a free refill period.

The way a sliding scale works is where if a fee is £10,000 and the rebate period is stretched over 10 weeks then for each week completed by a candidate £1000 is deducted from a possible refund if the candidate does not work out. Therefore, if a candidate lasted 5 weeks before walking out and the agency could not find a replacement then they’d owe your company £5000.

A free refill is generally an extension period after the sliding scale period. This is where even though an agency would not owe you a refund anymore, they would not charge another fee for a replacement.

Why not have longer rebate periods?

It seems fair that if you have paid £10,000 for a candidate and they left within 6 months you would feel short changed. So why not have longer rebate periods than 1-3 months?

If the job sold to them is not what is expected it gives someone a reason for leaving. It has been known for a hiring manager to embellish some promises to convince someone to join.

Secondly, circumstances can change over time that could not be foreseen by either party. The client might have genuinely had a lot of overtime for the candidate, but a key customer of theirs ran into financial trouble and cut the extra demand that had led to the overtime in the first place. Or the candidate might have found out their partner is ill, and they can no longer commit to the staying away from home. Are those circumstances the recruiters fault?

Who regulates all this in case something goes wrong?

Whilst there are membership regulators such as the REC (Recruitment & Employment Confederation) and APSCo (The Association of Professional Staffing Companies) among others, none hold any power. They can’t enforce any regulation bar withdrawing a companies membership. And in reality more and more recruitment agencies are moving away from the memberships.

We ourselves were REC members but the benefit just isn’t there. The purpose of a regulator is not only to protect the employer, but also the agency. A regulator sits as a middle man/woman. The only problem is that they hold no power. So effectively we pay an increasingly hefty fee for a logo that holds no weight and clients do not recognise it anyway. The recruitment industry in the UK is unregulated.

Who do you know who to trust then?

If you’re a client looking to use a recruitment agency you may have your reservations understandably. Any unregulated industry has cowboys and the recruitment industry is no different.

Company review sites will help then, right? We have a 4.9 rating on google. However, I don’t take any notice of review sites as they are almost always manipulated. In my experience the companies that push how good their reviews tend to be are the very ones to watch out for.

It comes on to the fact that the proof is in the pudding. You may know other companies hiring managers and you could ask who they would recommend. If you think after reading this that these guys know what they are talking about then give us a call.

Hopefully this helps.

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