Common risks and preventive measures regarding headhunting

Recruiting talent through headhunting companies is an important way for many companies. However, disputes arising from headhunting agency services are not rare in practice. How can we reduce such risks and take preventive measures?

Firstly, we have to figure out the common causes of such disputes. In practice, the causes could be mainly classified into the following categories:

The first cause is the “collision order”. When recruiting, companies may use multiple channels, including public recruitment, internal referrals, and posting job requirements to several headhunters. Different channels may lead to the same candidate. For example, if candidate A is recommended via internal referrals and a headhunter, and the company recruits A, whether the company should pay the commission to the headhunter?

The second cause is the protection period for the headhunting service. Generally, headhunters may set a “service protection period” in their contracts, which stipulates that if a company recruits candidates recommended by headhunters during the “service protection period”, the company should still pay the commission.

The third cause is that if the candidate resigns in a short term, whether the company should pay the commission? In a headhunting contract, generally, the company would require the candidate to work for a guarantee period, which is normally the probationary period. If the candidate resigns during this period, the headhunter should recommend additional candidates for free. In some contracts, such period is the precondition for paying the whole amount of the commission. If the candidate resigns shortly after such period, the company may also want to require the headhunter to implement the same responsibilities during such period.

Regarding the above causes, we recommend companies to take corresponding preventive measures.

Dealing with the “collision orders”, it is recommended to stipulate in the contract that if the candidate’s information received by the company overlaps with the information provided by other channels, the headhunter should be notified within a certain period, by this notification, the candidate will no longer be considered a candidate of the headhunter.

Dealing with the protection period, it is recommended to design some exclusive conditions. The exclusive conditions mainly include: (1) the company receives the same candidate’s information from other channels; (2) there are substantial changes in job positions, such as different job responsibilities or position levels, and etc.; and (3) the change in salary exceeds a certain percentage. Regarding this point, in the case (2016) Su 02 Min Zhong No.3090, the court held a positive view and determined that although the same candidate was re-recruited by the company, his job responsibilities and position levels had been changed, which falls under the scope of the exclusive conditions, so the company did not have to pay the commission.

Dealing with the candidate’s resignation in a short term after the guarantee period, on the one hand, it is necessary to strengthen the examination and selection of headhunters, and promptly eliminate headhunters who have dishonest behaviors. On the other hand, companies can require the candidate to provide his social security payment record, by which, companies could verify the candidate’s working experience, in addition, if a candidate has too many short-term working experiences, such as 2 months to 1 year, then such candidate may be not the right one.