How placement guarantees and reserves actually work

Most placement fees come with a guarantee period: a window of time (commonly 60–120 days) during which, if the candidate leaves or is terminated, the employer is owed some form of refund or a free replacement search. To fund that obligation, a portion of the placement fee — the guarantee reserve — is often withheld from the recruiter's payout until the guarantee period passes.

There are a few common ways a guarantee schedule can be structured. A prorated schedule refunds a percentage of the fee proportional to how much of the guarantee period remains. A sliding-scale schedule instead uses discrete tiers, commonly 100% refund in the first third of the period, 50% in the second third, and 25% in the final third. A full-refund schedule is simplest and least common: 100% refund any time within the period, nothing once it lapses.

From the recruiter's side, the reserve withheld isn't lost money — it's released once the guarantee period passes without a refund event, or reduced by whatever refund is actually owed if the placement doesn't survive. Understanding which schedule applies to a given deal, and modeling it before you accept a split agreement, tells you how much of your fee is at risk and for how long.