When and How Recruiters Negotiate a Conversion Fee

One of the beauties of contract staffing is the opportunity to earn a conversion fee on top of your hourly recruiter income if your client decides to hire the contractor direct.

In order to get that fee, you need to have a Conversion Fee Agreement in place from the start of the contract assignment.  But how do you know when to include a Conversion Fee Agreement in the client contract?

It is a good idea to have one in place for every contract placement you make.  Even if an assignment is not considered to be “temp-to-perm,” there is always a chance that an offer of employment could be made somewhere down the road.

Protect yourself with a conversion fee

Although you may think there is no chance of the client hiring a contractor direct, it’s better to protect yourself in advance than to be unprepared later if the time comes. After all, you have nothing to lose by adding a Conversion Fee Agreement to your client contract, but  you could lose thousands of dollars if you don’t!

Establishing a Conversion Fee Agreement is as easy as adding language to your contract with the client company.  If you utilize a contract staffing back-office, they can do it for you.

For instance, Top Echelon Contracting’s Client Services Agreement (CSA) contains a standard non-compete clause that states the client cannot hire the contractor for a period of one year after the assignment has ended without the recruiter’s approval.  We can easily substitute your Conversion Fee Agreement in place of this non-compete clause to help ensure you will receive a fee if the candidate is hired direct.

Remember, a contract staffing back-office should not take any portion of your conversion fee. They are also not under any obligation to invoice for the fee or to assist with its collection.

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Debbie Fledderjohann is the President of Top Echelon Contracting, the recruiter’s back-office solution. Top Echelon Contracting handles all of the administrative, financial, and legal issues associated with making contract placements. Click here to download your FREE Quick-Start Guide to Contract Staffing.