Do you still pay a recruiter their commission if they leave the company?

I recently had an employee leave my company and he is still due half his commission check for a placement.  What is the industry standard on paying out the remaining commission if an employee leaves?  PLEASE ADVISE!

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Comment by Sandra McCartt on August 6, 2012 at 4:38pm

Gabriel, i have given away so many pieces of my mind that there is some question as to how much of it is really left.  I have been on both side also and one of the things i knew when i left my first recruiting job to open my own firm was that even if i didn't think it was exactly fair to the house there would never be anybody who worked for me who ever walked away thinking that i owed them money.  Sometimes we know that we have been used a bit but I would rather be able to tell somebody who checked a reference that an ex employee struggled rather than have someone call me with the thought in their mind that i had stiffed an ex employee on comish so discount anything i might say. 

 

My guess in your situation is that your employee announced that he was not making enough money and gave a six week notice thinking that you would want to keep him so would increase his comish rate.  I agree with you that when somebody gives notice, cut them loose right then.  I ask only for an hour or two so work in progress can be transitioned.  I would also guess that part of the reason for the showing up late or not at all was that he decided he wasn't getting as much comish as he thought he deserved and rather than sit down and discuss it with you he just got pissy and decided to try and force your hand.  So be it.  Adios and bye bye, pay him as you have decided to do and when somebody calls you about him just say he did well for a while but slacked off because he didn't feel he was making enough money.  You felt you were offering him the best comp you could so when he gave six weeks notice you cut him loose and made sure he got any and everything he was due..

Many people who work for recruiting firms fail to take into consideration the overhead that the owner has to cover over and above base salaries when they decide they are not making enough money.  Sometimes we can show them and sometimes we can offer an increase in % as they increase their production.  Sometimes they just need to go someplace else and see if they can make more in another situation. 

If anybody starts that conversation with me my response is always.  I am happy to split 75/25 with you but that means you would have to cover you own base salary, pay for your own ads, do your own collections, and any other expense you might have.  My contribution is the office space, phone bill, utilities, and understand that neither of us gets any money until the cash is in and the guarantee period is complete.  Oh, and by the way, errors and ommissions insurance is available through most any insurance agency.  Put a pencil to it and tell me what you think.  Then we go back to the increase in % with increase in cash in.

When i started we were paid minimum wage.  We had to make cash in three times our wonderful pay rate before we got any comish and then it was 10% and comish was paid quarterly.  If i made a placement in Jan. it was paid in Jan. no comish until April 1. so i am not too sympathetic to recruiters griping about not making enough money.  I know, but i didn't walk 5 miles to work uphill both directions in five feet of snow.

Comment by Steve N Odell on August 6, 2012 at 6:44pm

Always, always have an agreement in place with ALL recruiters that work for you. We pay 15% ( when comm % is 35 -40%)on everything collected within 30 days of termination (only on closed business) and after the guarantee period is over. If they were on a draw and behind(most who quit are behind) it will be charged to recover the draw. We now do salary and commission.That changes it a bit but it is still a signed agreement that we will follow. Typically there will be some penalty in most agreements should they leave before it is paid. Depending on circumstances as eluded to above. 

Comment by Pamela Witzig on August 8, 2012 at 6:08pm

I know I'm weighing in late. It seems not paying commissions may result in paying it out - or more - in legal fees and/or bad "press." Just consider it tuition as a learning experience to use to refine contracts, adjust benefits, enforce required hours, etc. Best of luck.

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