Placement fee and rebate calculator

How the fee is worked out

A contingency placement fee in the UK is almost always a percentage of the candidate's first-year base salary. The calculation is simply the salary multiplied by the fee rate: a £55,000 salary at 20 per cent is an £11,000 fee. VAT at the standard 20 per cent is added on the invoice if your agency is VAT registered, making £13,200 payable by the client.

Base salary is the usual measure, but terms of business differ. Some agencies charge on total first-year remuneration, including guaranteed bonus or car allowance, and some clients negotiate it back to base only. Whichever you use, the calculator works the same way: put in the figure your terms charge on.

How the rebate is worked out

The rebate scale is a set of bands. Each band has a last week and a refund percentage, and a candidate who leaves in a given week falls into the first band that week sits inside. With the default scale of 100 per cent to week 2, 50 per cent to week 4 and 25 per cent to week 8, a candidate who leaves in week 6 falls in the third band, so a quarter of the fee is refunded. After the last band, nothing is.

Weeks are counted from the start date, not the offer or the invoice. That is the usual convention and it matters: a candidate who accepts in January and starts in March has a rebate window that runs from March.

What the numbers leave out

A rebate is usually conditional. Most terms require the client to pay the invoice on time and to tell you promptly that the candidate has left, and most exclude departures caused by redundancy or by the client changing the role. The calculator shows what the scale says; whether a refund is actually owed depends on those conditions.

Some clients prefer a free replacement to cash back. If your terms offer a replacement guarantee instead of, or as well as, a rebate, the cash figure here is the ceiling on what the departure could cost you, not a certainty.

Common questions

What is a typical recruitment agency fee in the UK?

For contingency perm roles, fees commonly sit between 15 and 25 per cent of first-year base salary, with volume agreements and preferred supplier lists pushing towards the lower end and hard-to-fill or senior roles towards the upper. Retained search is usually priced higher and paid in stages.

Is VAT charged on a placement fee?

Yes, if the agency is VAT registered, a placement fee is a standard-rated supply of services, so VAT at 20 per cent is added to the invoice. The calculator shows the fee both with and without it.

When does the rebate period start?

Normally on the candidate's start date. Check your own terms of business: a few count from the invoice date, which shortens the real protection a client gets if payment terms are long.

Do I refund the VAT as well?

A refund of part of a fee is normally made by issuing a credit note against the original invoice, and the credit note reverses the VAT on the refunded amount in the same proportion. Your accountant will confirm the treatment for your own VAT scheme.