Recruitment Fees Explained: Retained vs Contingent and Replacement Terms

Recruitment agency terms can be dense, but they govern thousands of pounds in fees. For most employers, the 'headline' percentage is the only number they focus on, yet the timing of payments and the protection against a hire leaving early are just as important.

This guide breaks down the common fee models, explains why agencies seem expensive, and clarifies the essential clauses you should check in any recruitment contract.

Retained vs Contingent Recruitment

The two most common ways recruitment is bought in the UK are contingency and retained search. Choosing the right one depends on the seniority and urgency of the role.

Contingency Recruitment (No Win, No Fee)

Most mid-level commercial recruitment is contingency-based. You only pay if you hire a candidate the agency introduced. This is low-risk for the employer, but it can lead to recruiters focusing on 'easier' roles elsewhere if your vacancy is particularly difficult.

Retained Recruitment (Search & Selection)

Retained recruitment involves paying the fee in three stages: one-third on engagement, one-third on delivery of a shortlist, and one-third on completion. This model is used for senior Executive Recruitment or confidential roles. It guarantees the recruiter's time and resources are dedicated exclusively to your search.

When are recruitment fees payable?

For contingency agencies, the fee usually becomes due on the candidate's first day of employment. Some agencies trigger the invoice upon acceptance of the offer, though this is less common for permanent roles. You should check:

• Standard Payment Terms: Usually 14 to 30 days.
• The 'Back-door' Clause: If you reject a candidate now but hire them directly 6 months later, the agency is usually still entitled to their fee.
• Defining 'Salary': Does the fee apply only to basic salary, or does it include the car allowance, guaranteed bonuses, or relocation packages?

What happens if a candidate leaves?

No recruitment process is 100% foolproof. If a candidate leaves shortly after joining, most agencies offer some form of protection. There are two main types:

• Rebates: The agency returns a portion of the fee (for example, a sliding scale that reduces the longer the candidate stays — the exact percentages vary by agency).
• Free Replacements: The agency agrees to find a replacement candidate at no extra charge.

Why do agencies seem expensive?

An illustrative 20% fee on a £50,000 hire is £10,000. For many business owners, this feels steep for 'sending a few CVs'. However, the fee covers more than just the introduction. To understand the true value, read our guide on what recruitment actually costs an employer in the UK. The fee covers:

• Subscription costs for premium search tools and job boards.
• The time spent screening hundreds of unsuitable applicants.
• Proactive headhunting of passive candidates who aren't looking for jobs.
• Managing the interview process and offer negotiations.
• The 'insurance' of the rebate/replacement period.

Evans Recruitment Partner: A Different Approach

We believe a traditional percentage-of-salary contingency fee can create a transactional relationship. Our Recruitment Partner model is designed for long-term collaboration.

For a fixed monthly fee of £399 + VAT (12-month minimum), we provide ongoing recruitment support, including search, screening, and guidance. When a placement is made, the success fee is just 5% of the first-year basic salary.

Conclusion

Before signing any recruitment agreement, look past the percentage. Understand when you will be invoiced, how 'salary' is defined, and exactly what protection you have if the hire doesn't work out. Transparency in fees usually leads to a much better hiring experience.