Every agency has to decide how it gets paid. For most solo and boutique recruiters, the choice comes down to contingency vs retained recruitment. One rewards speed, the other rewards depth, and each suits different roles and clients.
This guide explains how both models work from the agency side, how the day-to-day work differs, and when a small agency should use each.
How Contingency Recruitment Works for an Agency
With contingency recruitment, you are paid only when your candidate is hired. The client pays a placement fee once the candidate accepts or starts, depending on your terms. If the role is filled another way, you earn nothing.
Contingency roles are often non-exclusive. The client may brief several agencies at once, so the first strong shortlist usually wins. Some clients agree to exclusive recruitment on a contingency basis for a set period, which reduces the race but still means no fee without a hire.
For a small agency, contingency means:
- Low barrier to winning new clients
- No income for work on roles that do not fill
- Pressure to submit quickly, sometimes at the expense of depth
How Retained Recruitment Works for an Agency
With retained recruitment, the client commits to you up front. Part of the fee is usually paid in stages, often with a retainer fee at the start and further payments at agreed milestones, such as shortlist and placement.
Retained search is usually exclusive. You are the only agency working the role, so you can take the time to map the market and approach passive candidates properly. It is more common for senior, specialist or confidential roles.
For a small agency, retained means:
- Committed income and a client invested in the process
- More time per role, and higher expectations on quality and reporting
- Harder to win, especially without a track record
Contingency vs Retained Recruitment Compared Side by Side
| Factor | Contingency | Retained |
|---|---|---|
| When you are paid | On placement only | In stages, often starting up front |
| Exclusivity | Often shared with other agencies | Usually exclusive |
| Speed of work | Fast, first good shortlist wins | Measured, depth matters more |
| Risk to the agency | High, unpaid if the role does not fill | Lower, part of the fee is committed |
| Typical roles | Volume, mid-level, repeat hires | Senior, specialist, confidential |
| Client relationship | Transactional at first | Closer partnership |
Recruitment fees under both models vary widely by sector, seniority and agreement. Set yours in your own terms of business. If you are still deciding on a fee model, our guide on how to start a recruitment business covers the wider setup.
Which Roles and Clients Suit Each Model
Contingency tends to suit: clients hiring regularly for similar roles, markets with plenty of candidates, and new client relationships where trust is still being built.
Retained tends to suit: hard-to-fill or senior roles, confidential replacements, and clients who value a thorough search over speed.
Many small agencies run both. They start new clients on contingency, then propose retained terms for a difficult role once they have proven themselves. Tracking your fill rate by client, as covered in our guide to recruitment KPIs, shows which clients are worth moving to retained.
How the Day-to-Day Work Differs on Each Model
A contingency recruiter works against the clock. The priority is a small, well-matched shortlist sent before other agencies get there. Your own CV library is the fastest place to start a contingency search, because you already know many of those candidates.
A retained recruiter works more like a researcher. Expect a longer list, structured approaches to passive candidates and regular client updates. Our guide to headhunting covers the sourcing methods that suit retained work, and our guide to the recruitment process covers each stage.
On either model, speed in searching your existing candidates helps. EdgeTal, our app, lets you search your CV library in plain language on your phone, showing a match percentage and the area of the CV that matched, with candidate data stored on the device. It is currently in a limited beta.
Conclusion
Contingency rewards speed and suits repeat, mid-level hiring. Retained rewards depth and suits senior or hard-to-fill roles. Many small agencies use both, choosing the model that fits each client and role.
Want faster CV search with candidate data kept on your phone? EdgeTal is in a limited beta, onboarding small groups of UK agencies. [Join the early access waitlist]
Frequently Asked Questions
What is the main difference between contingency and retained recruitment?
With contingency, the agency is paid only if its candidate is hired. With retained, the client pays part of the fee up front or in stages and usually gives the agency exclusive rights to the role.
Should a new recruitment agency offer retained recruitment?
Most new agencies start with contingency, because it is easier to win clients. Retained becomes realistic once you have a track record in a niche and a client who trusts you with a difficult role.
What should recruitment terms of business include?
Typically your fee structure, when fees are due, exclusivity, and what happens if a candidate leaves early, often called a rebate period. Get professional advice on your own terms.