Recruiters connect employers with suitable talent, involving sourcing, vetting, and presenting candidates to fill open positions. The compensation structure for this profession is complex and highly variable, directly influencing the timeline of when a professional receives payment. Understanding this structure requires examining the specific operational model under which a recruiter works.
Differentiating Compensation Models
The fundamental factor determining a recruiter’s pay structure is their operational category: In-House or Agency. An Internal Recruiter is a salaried employee of the company, functioning within the Human Resources or Talent Acquisition department. An Agency Recruiter is employed by an external firm that contracts services to various client organizations. This difference creates a divergence in payment schedules. Internal compensation is a standard salary, while Agency compensation is derived from client fees for successful placements, tying income to completed transactions.
Pay Timing for Internal Recruiters
Internal recruiters operate within the standard payroll cycles of their organizations. Their primary compensation is a fixed salary, paid on a predictable, regular schedule, typically bi-weekly or monthly. This means their income is not immediately dependent on a specific candidate accepting an offer or starting a new role.
Incentive pay is generally structured as a bonus tied to broader performance metrics. These bonuses are usually calculated based on quarterly or annual targets, such as time-to-hire or volume of hires. The timing of this variable compensation is delayed and aligned with the company’s fiscal reporting cycles, rather than the immediate success of an individual placement.
Pay Timing for Contingency Recruiters
Contingency recruiting means the client only pays a fee if the recruiter successfully places a candidate. For the recruiter working under this model, commission payment is triggered by a sequence of specific events. The first trigger is the candidate accepting the job offer, which formalizes the placement agreement and allows the agency to begin invoicing.
The second trigger is the candidate’s actual start date with the client company. Many client agreements stipulate that the placement fee is not fully earned until the new employee is physically on the job, providing a practical confirmation of the hire. Following this event, the agency issues an invoice for the agreed-upon placement fee, which usually represents a percentage of the new employee’s first-year salary.
The actual receipt of cash introduces a further delay for the individual recruiter. Clients are typically granted payment terms of 30 to 60 days from the invoice date. Although the commission is officially earned upon the candidate’s start date, the cash flow is delayed while the agency waits for the client payment. The recruiter’s personal commission is then paid out in the agency’s next payroll cycle after the client’s payment has cleared.
Pay Timing for Retained Search Recruiters
Retained search operates on a fundamentally different financial model from contingency, focusing on high-level or specialized roles where the client commits to the search firm exclusively. This model provides the recruiting firm with a more immediate and predictable cash flow, as the payment is structured in non-refundable installments tied to the progress of the search. The initial installment, typically one-third of the total estimated fee, is paid upfront when the client signs the contract and the search formally commences.
The second installment, also usually one-third of the total fee, is paid upon the achievement of a specific, defined milestone. This milestone is commonly the presentation of a qualified shortlist of candidates to the client for final interviews. This structure ensures the recruiter receives compensation for the significant work involved in candidate identification and vetting.
The final installment, consisting of the remaining one-third of the fee, is paid upon the successful placement of the candidate, usually coinciding with their acceptance of the offer or their start date. This installment-based structure means the retained recruiter receives segments of their compensation throughout the search, providing a steadier stream of revenue.
The Critical Role of the Guarantee Period
The payment structure includes a final phase related to the guarantee period, regardless of the recruiting model. This period represents a contractual safety net for the client, typically spanning 60 to 90 days following the candidate’s start date. During this time, the fee paid to the recruiting firm is still considered “at risk” should the placed candidate voluntarily leave or be terminated for cause.
If the new employee departs within this window, the client is usually entitled to a full or partial refund of the placement fee, or the recruiting firm must conduct a replacement search at no additional charge. For the individual recruiter, this means that while they may have already been paid their commission, that payment is subject to a potential “clawback.” The agency may require the recruiter to repay the commission or apply it as a credit toward future placements if a refund is issued.
The recruiter’s commission payment is not entirely secured until the guarantee period has successfully expired without incident. Only after the 60- or 90-day mark passes and the candidate remains employed does the fee become fully earned by the agency. This post-placement waiting period represents the final step in the payment timeline.