Recruiters can play a vital role in important hires by searching out the better candidates, doing initial selection and recommendations, and saving the employer a lot of time and frustration. To make sure there is a smooth and successful relationship, most employers enter a Search Retainer Agreement with a professional recruiter to define goals and expectations as well as to set compensation.
Many recruiters will present the employer with a standard search retainer agreement. These are often subject to some negotiation and should be closely reviewed by the employer. Key factors to focus upon include:
- Scope of the Search: There should be a defined search with job description-based criteria and timelines for producing qualified candidates who meet the criteria.
- Background Check Obligations: Many recruiter relationships go sour when the recruiter presents a candidate with undisclosed issues (like a non-compete or other background problem). The Search Retainer Agreement needs to spell out in its body, or in an attachment, the recruiter’s role in doing a background review.
- Clear Compensation Structure: Some recruiters are paid on a contingent basis; others are paid flat fees. Often the fee is formula-based set by the candidate’s salary – the formula and its triggers should be clear in the Search Retainer Agreement.
- Representations/Authority: The Recruiter is an agent of the employer so the Agreement needs to articulate clearly what the Recruiter can and cannot hold out to candidates regarding the terms and conditions of the job and the Recruiter’s ability to bind the employer.
- Warranties: What if a hire doesn’t work out or quits soon after he or she starts? The Search Retainer Agreement needs to spell out whether hires are covered by a warranty – usually meaning the Recruiter commits to find a replacement candidate at no cost.
- Confidentiality: Is there a provision by which the Recruiter safeguards the employer’s confidential information?
Takeaways: The Search Retainer Agreement creates a legal relationship that can either lead to excellent new hires or degenerate into disputes and lost opportunities. These are just a few examples of the provisions necessary for an employee to review when retaining a search professional. Consult legal counsel at the beginning so that you won’t need counsel at the end!