Summary

  • A perm fee can turn from paid to disputed if the candidate leaves inside the rebate period.
  • Move disputed invoices out of the automated chase, manage them separately and keep a clean timeline.
  • Get rebate wording clear and agreed up front. It prevents most arguments later.

What is a rebate clause?

Here’s a typical scenario in recruitment. You place a candidate, invoice the fee, and then - sometimes weeks later - the candidate resigns inside the guarantee period. The client wants some or all of the fee back and an invoice you’d counted as good is suddenly in dispute.

The mistake is to treat that like an ordinary late payment and keep firing reminders. A client withholding a fee under a rebate clause they’re contractually entitled to invoke is not a late payer. Chasing them the same way will damage an account over something that was agreed in the terms.

How rebate and guarantee clauses usually work

Most permanent placement agreements include one of these:

  • Rebate. If the candidate leaves within a set period, you refund a percentage of the fee usually on a sliding scale - the earlier they go, the more you return. A common shape is 100% in the first few weeks, tapering to nil by around week 12.
  • Free replacement. Instead of money back, you agree to find a replacement candidate at no additional fee within the guarantee period.
  • Refund. A straight return of part of the fee, less common than a rebate scale.

You can decide which one applies in your terms of business. Decide which one will work best for your business model and then act accordingly. If the client signs the contract, they must respect the terms.

Separating a genuine dispute from a client that’s stall

Not every withheld fee is a legitimate rebate claim. Some clients use “the candidate isn’t working out” as cover for a straightforward stall. The job is to tell them apart.

  • A genuine rebate claim references the clause, gives a leaving date, and usually comes reasonably promptly. Here your process is to verify the date against your terms, calculate what’s actually due back, and - where your agreement allows - offer a replacement first.
  • A client just delaying payment tends to be vague, arrives only after you’ve chased, and doesn’t line up with the contractual window. Here you’re back to normal, firm credit control.

The practical problem for a small agency is keeping these separate from your ordinary chasing, so a real dispute doesn’t get hammered with auto-reminders while a stall doesn’t get to hide in the “disputed” pile indefinitely.

A quick example

A perm-only agency placing marketing roles had three fees “in dispute” at the end of a quarter. Two were genuine early leavers owed a partial rebate; one was a client who had simply gone quiet and reached for the guarantee clause when chased. Because all three sat in the same inbox thread, all three got chased by mistake.

What good looks like

  • Get the terms right up front. Clear rebate wording, agreed at sign-up, prevents most disputes from becoming arguments.
  • Move disputed invoices out of the auto-chase. The moment a fee is genuinely disputed, it should stop receiving standard reminders. Chasing a client through a legitimate rebate claim is the fastest way to lose them.
  • Keep a clean timeline. Log the leaving date, the clause invoked, and every message, so if it does become contentious you have the full picture.
  • Offer replacement first where you can. If your terms allow a free replacement, leading with that often keeps the fee and the relationship intact.
  • Don’t add late fees to a disputed invoice. Statutory late fees apply to undisputed overdue invoices. Adding them to a fee that’s under a genuine rebate claim is both wrong and inflammatory - see how to apply late fees as a recruitment agency.

Where Trove fits

Trove’s kanban board is built for this kind of triage. Columns are configurable so you can give disputes their own column and drag any overdue clients into that column when required - all without the client getting caught by the standard reminder sequence.

When a partial rebate is genuinely due, Trove handles the credit side cleanly, with clear credit descriptions and activity statements so the client’s balance reflects what actually happened rather than prompting confusion or an unwanted refund.

Trove runs a free 30-day trial and connects to Xero in about five minutes. Start a free trial or book a demo.

Frequently asked questions

What’s a typical rebate period for a permanent placement?

Commonly 8 to 12 weeks, on a sliding scale - the client reclaims the most if the candidate leaves in the first couple of weeks, tapering to nothing by the end of the window. The exact terms are whatever’s in your agreement, which is why it pays to set them clearly at sign-up.

Should I pause chasing while a placement fee is in dispute?

Pause the automated chasing, yes. A genuine rebate claim shouldn’t receive standard overdue reminders. Keep managing it actively, but as a dispute to resolve, not an invoice to hammer.

Can I charge late payment fees on a disputed perm fee?

No. Statutory late fees apply to undisputed invoices that are simply overdue. If a fee is genuinely under a rebate claim, it isn’t a straightforward late payment and late fees don’t belong on it.

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