Payment of Commission to Recruiters Who Resign

Morning! What’s your policy for paying recruiters commission on their placements after they leave your firm given the delay in payment from clients and the hire guarantee period?

How do you establish such a policy?

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Permalink Reply by Amber on February 20, 2013 at 11:37am

There could be many ways, but one way is to have a policy that follows closely to how they are paid the commission while they work there. For ex., if you do not pay commission until client pays AND the guarantee period is over then the policy for paying employees when they leave could be that they will earn that commission for any placements made before they left but not until same time as they would have been if still there. 

There are lots of ways you can establish a policy on this, but make sure it is clear at hire and consistent for all employees. Also, be sure you know what any laws or regulations are where the employment is located.

Permalink Reply by Kerry M. Beck Konstantin on February 20, 2013 at 12:36pm

Hi Amber!

Just to clarify...would you pay a recruiter commission after they have left your company for placements made before they left, but where the funds we not collected from a client until after the recruiter’s resignation? Thank you.



Amber said:

There could be many ways, but one way is to have a policy that follows closely to how they are paid the commission while they work there. For ex., if you do not pay commission until client pays AND the guarantee period is over then the policy for paying employees when they leave could be that they will earn that commission for any placements made before they left but not until same time as they would have been if still there. 

There are lots of ways you can establish a policy on this, but make sure it is clear at hire and consistent for all employees. Also, be sure you know what any laws or regulations are where the employment is located.

Permalink Reply by Amber on February 20, 2013 at 1:34pm

Hi Kerry - yes, if they earned it I can't think of why it shouldn't get paid.

Permalink Reply by Steve N Odell on February 22, 2013 at 3:44pm

All of our recruiters sign an agreement when they come to work. Basically they are not paid on any pending ones that are placed after they leave. If money is already collected before they leave then we pay after the guarantee period is over. Too much risk there if you do. It could be a little different if they are on a draw or salary. If they are behind on the draw those monies have to go to offset that 1st and they are paid on what's left over. Our agreement states that they take less % of everything collected within 30 days and nothing afterwards.That may sound unfair but how long will it take you to refill the desk and make it profitable? In a apartment lease they call it a relet fee(to paint etc) In commodities it is a restocking fee. As owners you have to think ahead. AND they tell you they are going to go do "X' and you find out later they went into competition with you. I don't want to finance their new venture. We are salary + comm. and they get less % after leaving.

Permalink Reply by Sandra McCartt on February 22, 2013 at 4:21pm

If a placement has been completed...offer made and accepted with start date set the placement has been made.  If the candidate starts, fee is paid and guarantee period is satisfied full commission is paid.  I consider commission earned when offer is made, accepted and candidate starts to work.  If a recruiter did the work got the offer and the acceptance then left they are still paid if the candidate starts after they leave and stays through guarantee period. Of course the fee has to be paid.  As we are unable to charge back commission paid to a recruiter who is no longer with us and they are not in a position to replace,someone else has to handle the replacement. Whoever handles the replacement gets the comish.  If we have to issue credit for the fee no comish.  If an offer has been made and someone else has to close the placement the recruiter who got the offer on the table gets half comish after money is in and guarantee is complete.  Closer gets the other half.

To specifically answer your question.  Yes if the placement is made before a recruiter leaves they get paid when the money comes in.  It doesn't matter how long it takes to collect it. 

 

 

Permalink Reply by Coreen Darnall on February 22, 2013 at 5:29pm

In the payment agreement they sign with us, it is outlined that the recruiter must be currently working when the commission is paid to receive commission.  Our commission's are not paid until the money is collected from the client.  If it is a placement that is completed (signed contract has happened and a start date has been set before the recruiter leaves) I would still feel obligated to pay the commission to the recruiter, but I would hold it until the guarantee period has expired.  If someone else had to take over and close the deal because the recruiter left, the commission would go to the recruiter who closed the deal.  

Permalink Reply by Kerry M. Beck Konstantin on February 22, 2013 at 7:38pm

Steve, Many, many thanks! The situation is such that the recruiter brought the client to the agency (new client) and the jobs (new jobs); then recruited, qualified, and coached candidates, and then closed the placements i.e. negotiated the offer terms and conditions (salary, start dates, benefit start dates, sign on bonus, etc.); and received the client’s offers. The recruiter then facilitated candidate’s acceptance (helped them weigh start salary vs. security/ advancement / commute, etc.) and signing and secured the start date. Then the recruiter resigned. The candidates did start on the agreed negotiated date and fulfilled their guarantee period. The check from the client was received -actually before the guarantee.

However, the signed offer agreement between the recruiter and the firm details the salary and the commission %. It also states that the recruiter will be paid a % when the client pays and the balance after the guarantee period. It does not state that the recruiter must still be employed.

I appreciate your thoughts.



Steve N Odell said:

All of our recruiters sign an agreement when they come to work. Basically they are not paid on any pending ones that are placed after they leave. If money is already collected before they leave then we pay after the guarantee period is over. Too much risk there if you do. It could be a little different if they are on a draw or salary. If they are behind on the draw those monies have to go to offset that 1st and they are paid on what's left over. Our agreement states that they take less % of everything collected within 30 days and nothing afterwards.That may sound unfair but how long will it take you to refill the desk and make it profitable? In a apartment lease they call it a relet fee(to paint etc) In commodities it is a restocking fee. As owners you have to think ahead. AND they tell you they are going to go do "X' and you find out later they went into competition with you. I don't want to finance their new venture. We are salary + comm. and they get less % after leaving.

Permalink Reply by Kerry M. Beck Konstantin on February 22, 2013 at 7:39pm

Amber,

Thanks! Your thoughts are helpful.

Kerry M. Beck Konstantin said:

Hi Amber!

Just to clarify...would you pay a recruiter commission after they have left your company for placements made before they left, but where the funds we not collected from a client until after the recruiter’s resignation? Thank you.



Amber said:

There could be many ways, but one way is to have a policy that follows closely to how they are paid the commission while they work there. For ex., if you do not pay commission until client pays AND the guarantee period is over then the policy for paying employees when they leave could be that they will earn that commission for any placements made before they left but not until same time as they would have been if still there. 

There are lots of ways you can establish a policy on this, but make sure it is clear at hire and consistent for all employees. Also, be sure you know what any laws or regulations are where the employment is located.

Permalink Reply by Kerry M. Beck Konstantin on February 22, 2013 at 8:40pm

Sandra,

Understood and appreciated!

Sandra McCartt said:

If a placement has been completed...offer made and accepted with start date set the placement has been made.  If the candidate starts, fee is paid and guarantee period is satisfied full commission is paid.  I consider commission earned when offer is made, accepted and candidate starts to work.  If a recruiter did the work got the offer and the acceptance then left they are still paid if the candidate starts after they leave and stays through guarantee period. Of course the fee has to be paid.  As we are unable to charge back commission paid to a recruiter who is no longer with us and they are not in a position to replace,someone else has to handle the replacement. Whoever handles the replacement gets the comish.  If we have to issue credit for the fee no comish.  If an offer has been made and someone else has to close the placement the recruiter who got the offer on the table gets half comish after money is in and guarantee is complete.  Closer gets the other half.

To specifically answer your question.  Yes if the placement is made before a recruiter leaves they get paid when the money comes in.  It doesn't matter how long it takes to collect it. 

 

 

Permalink Reply by Kerry M. Beck Konstantin on February 22, 2013 at 9:23pm

Many, many thanks! The situation is such that the recruiter brought the client to the agency (new client) and the jobs (new jobs); then recruited, qualified, and coached candidates, and then closed the placements i.e. negotiated the offer terms and conditions (salary, start dates, benefit start dates, sign on bonus, etc.); and received the client’s offers. The recruiter then facilitated candidate’s acceptance (helped them weigh start salary vs. security/ advancement / commute, etc.) and signing and secured the start date. Then the recruiter resigned. The candidates did start on the agreed negotiated date and fulfilled their guarantee period. The check from the client was received -actually before the guarantee.

However, the signed offer agreement between the recruiter and the firm details the salary and the commission %. It also states that the recruiter will be paid a % when the client pays and the balance after the guarantee period. It does not state that the recruiter must still be employed.

I appreciate your thoughts.



Coreen Darnall said:

In the payment agreement they sign with us, it is outlined that the recruiter must be currently working when the commission is paid to receive commission.  Our commission's are not paid until the money is collected from the client.  If it is a placement that is completed (signed contract has happened and a start date has been set before the recruiter leaves) I would still feel obligated to pay the commission to the recruiter, but I would hold it until the guarantee period has expired.  If someone else had to take over and close the deal because the recruiter left, the commission would go to the recruiter who closed the deal.  

Permalink Reply by Alan Fluhrer on February 23, 2013 at 7:59pm

Improve your brand always and your reputation within our industry. Paying an earned commission is pennies compared to what you may regret months/years later from a person that felt they e were wronged.

I knew one company years ago, very successful... That over paid the person that resigned. While others have their opinions, I saw those that left, refer business back when they couldn't support it at their new company. Also 

And the recruiting firm had a great reputation among local recruiters in the area

My 2 cents

Permalink Reply by Kerry M. Beck Konstantin on February 24, 2013 at 6:38pm

Alan,

Very much appreciated! Thank you!

Alan Fluhrer said:

Improve your brand always and your reputation within our industry. Paying an earned commission is pennies compared to what you may regret months/years later from a person that felt they e were wronged.

I knew one company years ago, very successful... That over paid the person that resigned. While others have their opinions, I saw those that left, refer business back when they couldn't support it at their new company. Also 

And the recruiting firm had a great reputation among local recruiters in the area

My 2 cents

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