What is a Conversion Fee Agreement?

When a company hires a contract worker on a full-time basis, this is known as a contract-to-direct (or contract-to-hire) situation. When this happens, it’s always best for the recruiter if they’ve negotiated a Conversion Fee Agreement directly with the client company at the beginning of the contract assignment.

If this is done, the recruiter’s conversion fee will be established in advance if the company eventually hires the contractor as a full-time employee. The Conversion Fee Agreement can be written into the language of the recruiter’s standard Client Services Agreement. This will prevent companies from converting a contractor to a full-time employee without paying the conversion fee.