An employer who hires a job applicant, will receive a refund of the placement fee, if the applicant is dismissed from service for dishonesty, provided the applicant is dismissed within a certain number of days after joining the work.
Whether an employer is entitled to a refund depends upon the contact entered into between an employer and an agency. If a contact specifically contains terms for refund, then an employer will get a placement fee refund in spite of the fact that a job applicant has already been hired by an employer.
Generally, a contract between an employer and an agency for hiring employees will contain a provision for refunds. Where a refund is provided for in a contract, an employer will be entitled either to recover the agency fee that is already paid or be exempted from paying a contractual fee where the employer has not paid the fees. However some statutes for the purpose of refund limit an agency’s fee in proportion to an amount that an employee earns.
An agency must make a refund upon demand by an employer. Any refusal by an agency to pay a refund amount will invite disciplinary action and an agency will be liable to pay punitive damages[i].
Sometimes, an agency is entitled to be reimbursed any amount paid as a refund to an employer. In order to get reimbursed, an applicant must have left an employer voluntarily without good cause. Good cause is a question of law and a claimant has the burden to prove that s/he had good cause for quitting[ii]. Good cause is limited to instances where unemployment is caused by external pressures in which a reasonably prudent man would be justified in giving up employment[iii]. An applicant who has left a job to attain a better paid job cannot be said to have left the job for good cause.
[i] Deck & Decker Personnel Consultants, Ltd. v. Thomas, 623 S.W.2d 90 (Mo. Ct. App. 1981)
[ii] Missouri Div. of Employment Sec. v. Labor & Industrial Relations Com., 616 S.W.2d 138 (Mo. Ct. App. 1981)
[iii] Child v. Board of Review, 657 P.2d 1375 (Utah 1983)