Contingency recruiting is agency recruiting where the client pays a fee only if it hires a candidate the agency presented. There is no upfront payment. The fee is usually a percentage of the new hire's first year salary, set in the agency's terms and paid after the candidate starts.
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Agency recruiting where the fee is paid only if the client hires the agency's candidate. Fees are usually a percentage of the hire's first year salary.
Because the agency is paid only on success, the client takes little financial risk and often works with several agencies on the same role. The first agency to present the candidate who gets hired earns the fee. That creates a race, which rewards speed and strong networks.
Terms usually cover the fee percentage, payment timing, candidate ownership rules and a guarantee period. If the hire leaves within that period, the agency typically replaces the candidate or refunds part of the fee.
Contingency suits roles that are fairly well defined and fillable from a reachable market. Senior, confidential or very hard searches more often go retained, where part of the fee is paid upfront and the agency commits to a full search.
Formula: Contingency fee = agreed fee percentage × hire's first year base salary (or the salary basis defined in the terms)
Why it matters to recruiters
Most agency recruiters work some or all of their desk on contingency, so understanding it shapes how they prioritize. Not every contingent role will close. Agencies that qualify clients well, focus on roles they can actually fill and secure exclusivity where possible earn more for the same effort.
An example from a recruiting desk
A small IT agency takes a contingency search for a network engineer at a 20 percent fee. Two other agencies are also working the role. The recruiter submits three candidates within 48 hours, and one is hired at a 110,000 dollar salary. The client pays 22,000 dollars after the start date, with a 90 day replacement guarantee in the terms.
Tips that help
Qualify each role on urgency, pay and hiring manager access before you commit time.
Ask for a short exclusive window, even a week or two, on roles you can fill.
Put candidate ownership rules in writing so fee disputes are easy to settle.
Track which clients actually hire from your submittals and focus there.
Mistakes to avoid
Working every open role a client sends without checking whether it is real and fillable.
Submitting candidates without their clear permission to be presented to that client.
Frequently asked questions
What is the difference between contingency and retained recruiting?
In contingency recruiting the agency is paid only when a hire is made. In retained search the client pays part of the fee upfront and the agency commits to a full search, often for senior or confidential roles.
Who pays the contingency fee?
The hiring company pays it. Candidates should never be charged by a reputable agency for being placed. The fee terms are agreed in a contract between the agency and the client.
What happens if the hire leaves early?
Most agreements include a guarantee period. If the person leaves within it, the agency usually finds a replacement or gives a partial refund, depending on the terms both sides signed.
