Conversion Fee

Compensation fee paid to a temporary staffing firm for the loss of an employee when the staffing firm’s customer hires the temporary employee on a direct-hire basis. In the United States, this is also known as Liquidated Damages. In Europe, the Conversion Fee may be defined or restricted under law. (Some full-service firms prefer to charge a “placement fee” rather than a conversion fee when this occurs. Many firms allow the conversion fee to be negotiated over a certain period on the temporary assignment.). (See also: Temporary-to-Permanent.)

Source: Staffing Industry Analysts

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