Replacement guarantee
A replacement guarantee is a promise that if a placed candidate leaves within a set period, typically three months, the agency will find a replacement at no further fee. It is the alternative to a cash rebate, and many terms of business offer one or the other.
The logic differs from a rebate. A rebate returns money; a replacement keeps the fee with the agency and puts the work back on its desk. Clients who value the role being filled more than the refund often prefer it, and agencies usually do too, because the fee stays in the month it was reported and a good replacement can deepen the relationship.
The conditions are where replacement clauses earn their keep. Most apply only if the client paid the invoice within terms, if the candidate left for reasons other than redundancy or a material change to the role, and if the client asks for the replacement within a set number of days of the leaving date. Many also say the replacement must be found within a time limit, after which the obligation lapses, and that it applies once per placement.
A worked example. A £55,000 placement at 20 per cent, a fee of £11,000, carries a three-month replacement guarantee. The candidate resigns in week seven. The client paid on time, so the agency re-opens the search. If the replacement starts at £58,000, some terms allow the agency to invoice the difference in fee on the extra £3,000, which is £600 plus VAT. If the client restructures the role into something different, the guarantee often does not apply at all.
It is worth being clear which clause applies when. Some terms offer the client a choice between a rebate and a replacement; others give a replacement first and a rebate only if the agency cannot find one within a set time; a few give both on a sliding scale. Whichever structure is used, the consultant who took the brief should know it before the client rings to say the candidate has left, not after.
Where it goes wrong: nobody knows when the guarantee on a given placement ends; the client paid 40 days late but still expects the replacement; or the replacement search is run at the bottom of the pile because it earns nothing new, and the client notices.
How Vayora handles it
Every placement carries a guarantee in months, three by default when Vayora creates the placement from an accepted offer, shown in the placements list and on the placement itself with the date the guarantee ends, worked out from the start date. Your agency's rebate and guarantee schedule sits in commercial terms, and individual placements can carry their own rebate clauses. When a perm invoice goes overdue and a schedule is set, Kit's drafted chase adds a line that paying within terms keeps the replacement guarantee live; nothing sends until you choose to send it. What Vayora does not do yet is link a replacement search back to the original placement, so note the link on the new role.
FinanceThe longer answer: What is a rebate period in recruitment?