How a referral programme works
HR shares open roles with employees, who submit a friend's or former colleague's resume through a form, an email address or the HR system. The candidate is tagged as a referral so the source is known. They go through the same screening and interviews as everyone else. If the candidate is hired and stays past the qualifying period, the employee receives the referral bonus through payroll. The policy should state who is eligible, which roles qualify, the bonus by level and when it is paid.
- Exclude HR, recruiters and the hiring manager for the role from the bonus
- Fix the qualifying period, for example 90 days after joining
- Put referred candidates through exactly the same selection as others
- Tell the referring employee the outcome, even when it is a rejection
Strengths and blind spots of referrals
Referred candidates arrive with an inside view of the job, the manager and the culture, so fewer are surprised after joining. They cost less than consultant hires and often close faster. For factories, hospitals and field teams opening in a new town, referrals from existing workers are a practical way to fill shop-floor and shift roles. The risk is sameness. If every hire comes from the same friendship and hometown networks, teams become narrow and cliques form. Balance referrals with open sourcing, and notice when one manager's team is built almost entirely on referrals.
See it on your own data
A 30-minute demo on a video call. We set up your departments, shifts and leave rules and show attendance, leave and payroll running for your team. Free for your first 50 employees.
Book a free demoSee pricingFrequently asked questions
What is an employee referral bonus?
An employee referral bonus is a payment to an employee whose recommended candidate is hired and stays for a qualifying period, commonly 90 days or six months. The amount is set in the referral policy, often by role level, and is paid through payroll as part of salary, so it is taxed like the employee's other earnings.
Can HR employees get a referral bonus?
Referral policies commonly exclude HR and recruitment staff, and the hiring manager for that role, because they influence the selection decision. Some companies let HR staff earn a bonus for roles outside their own hiring responsibility. Whatever you decide, write it into the policy so nobody argues about eligibility after a hire.