Our employee referral scheme policy creates a set of detailed eligibility criteria for entitlement to an introduction bonus where an existing employee successfully recommends someone for employment. Referral schemes can, however, create a lack of workplace diversity and will seriously limit your pool of job applicants if you don’t still advertise more widely.
Recruitment cost saver
One way of trying to cut down on expensive recruitment costs is to introduce an employee referral scheme. A scheme of this nature enables existing employees to refer their friends, family members or personal contacts (e.g. former worker colleagues) for prospective employment. If the referred person is then subsequently recruited as a result of that introduction, the referring employee receives a one-off introduction bonus (which is fully taxable like salary), normally no more than about £500. This recruitment method can be a lot cheaper than using recruitment agencies or running advertising campaigns.
Policy provisions
Our Employee Referral Scheme Policy includes a number of key provisions setting out the terms of the scheme, including that:
It’s up to you how far you want to retain or change these provisions. We’ve included a provision enabling you to amend or withdraw the scheme at any time, or to change the amount of the bonus.
No bonus due
We’ve also listed various circumstances when a bonus won’t be paid, including where:
Potential pitfalls
If you rely too much on this method of recruitment, it’s likely to perpetuate any existing imbalances in the composition of your workforce. For example, if your workforce is comprised predominantly of people from a particular racial group or young people, you’re far more likely to see referrals of job applicants who have similar characteristics. This could lead to accusations of discrimination. In addition, if your recruitment or equal opportunities policies undertake that you’ll advertise all vacancies both internally and externally, you’ll still need to do this, so your costs might not be any less. In any event, this recruitment method isn’t ideal for senior or specialised/technical posts - those are best served by open competition to give you a wider pool of job applicants.