TL;DR

Permanent placement is when a recruiter or staffing agency finds a candidate who joins the client organisation as a direct, full-time employee. The agency earns a one-time fee. The employment relationship is between the candidate and the client, not the agency.

What Permanent Placement Actually Is

Permanent placement is the original model of recruitment: find the person, make the introduction, collect the fee. The recruiter's job ends at the point the candidate accepts the offer. From that moment, the employee belongs to the client organisation - payroll, benefits, management, and all future employment decisions are the client's responsibility.

This is in contrast to contract staffing, where the worker remains on the agency's books throughout the engagement. In permanent placement, the handover is complete. The recruiter is essentially running a highly specialised matchmaking service.

The fee structure reflects the one-time nature of the work. Permanent placement fees are almost universally calculated as a percentage of the candidate's first-year base salary, typically falling between 15% and 30% depending on seniority, specialism, and the negotiating dynamics between the agency and the client.

Most permanent placement arrangements include a rebate period - usually 30 to 90 days - during which the fee is partially or fully refunded if the candidate leaves or is terminated. After that window closes, the fee is earned regardless of outcome.

Why It Matters for Recruitment

Permanent placement is the dominant revenue model for most independent recruiters and search firms. Understanding its mechanics matters whether you're running the desk or working alongside agencies as an in-house TA professional.

For external recruiters, the business model is high-stakes and episodic. A successful placement generates a significant single payment - a £60,000 salary hire at 20% yields £12,000 in one transaction. But there's no residual income. The clock starts again the next day. This creates pressure to maintain pipeline volume and close rates simultaneously.

For in-house teams, permanent placement fees represent a real cost. A company that uses agencies heavily for permanent roles can spend 18-25% of total hire salary cost on recruitment fees annually. That number adds up fast in a growth phase. Many TA teams build internal sourcing capability specifically to reduce agency spend on permanent roles, which often becomes the justification for hiring in-house recruiters.

The retained vs. contingency distinction also matters. In a contingency arrangement, the agency only gets paid if their candidate is hired - which means they take on all the search risk. In a retained arrangement, the client pays part of the fee upfront, guaranteeing payment for the search effort regardless of outcome. Retained search is standard for executive-level and hard-to-fill roles.

In Practice

A Series B software company needs a VP of Engineering. They engage two agencies on a contingency basis and one executive search firm on a retained basis. The retained firm charges 33% of first-year compensation, with one-third payable at engagement, one-third at shortlist, and one-third at placement. The contingency agencies charge 20%.

The retained firm delivers a shortlist of six candidates within six weeks. One of the contingency agencies submits four candidates, two of whom overlap with the retained firm's list (a candidate ownership dispute follows). The second contingency agency submits one candidate who doesn't clear the first interview.

The company hires through the retained firm. The VP's salary is £180,000 plus a £30,000 bonus. Fee is calculated on base salary only: £180,000 x 33% = £59,400, paid in three tranches. The retained firm earns the full fee. The contingency agencies earn nothing.

Total time from brief to signed offer: 11 weeks.

Key Facts