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What is Employee Referral Bonus Policy?

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employee referral bonus policy

Employee Referral Bonus Policy is a financial reward for an existing employee. They receive it for referring new employees to the company. It increases the internal resource of recruitment for the company. The connections of the company improve. The company gets the opportunity to recruit potential candidates with high experience. Here we are discussing the Employee referral policy and its benefits.

So, keep scrolling and reading the content ahead.

Employee Referral Bonus Policy is a scheme in which the company's existing employees get a bonus. The current workers have to bring in new employees to the company for which they receive a reward. The employee referral policy is an internal resource of recruitment. It increases in internal networks of the company. The entire recruitment process becomes unique and easy for the business.

What is Employee Referral Bonus Policy?

Employee Bonus Policy is a referral bonus given to the company's existing workers. They received this as an incentive for recruiting candidates from their referral. It is a financial reward given to the Employees for recommending new candidates.

Employee referral is possible when the company gives a positive working environment for the existing employees. The company needs to maintain the motivation of the workers working there. It will allow them to search for new passive candidates to work for the company. Candidates with high motivation will search for new employees to work for the company ahead.

What are the Benefits of the Employee Referral Bonus Program Policy?

The Employee Referral Bonus Policy has various essential advantages for the company and the employees. The existing workers get to earn easy wages with the recommendation of candidates. The further advantages include:

1. Increase the Retention Rate of Employees

The employee referral program is a policy that helps the company to maintain the workers. The quality of the candidates the company hires is essential to maintain the retention rate. The company gets good candidates for job positions in the company. It improves the quality of the employees working in the organization. Quality workers increase the retention rate of the company.

2. Improvement in Hiring Quality

The employee referral program improves the hiring quality of the employees in any company. The existing employees recommend other candidates who have good potential. The quality of these candidates will be high, which will benefit the company.

3. Less Time-Consuming and Low Cost

The employee referral bonus policy reduces the time for recruitment. The overall process of recruitment is very time-consuming if done through external sources. Employee referral is an internal resource of recruitment that reduces time consumption. The company can quickly analyze and recruit new employees with a short interview process.

If the time consumption is low, then the cost of recruitment reduces. If the recruitment is done through advertisements, the process becomes expensive for the organization. The employee referral program policy template is less costly.

4. Improves the Brand of Employers

Employee referral is a form of employer branding strategy. The employer brand improves if the existing employees recommend new candidates to the company. The company gets positive marketing without any external support.

The company needs to maintain the working condition for the existing employee to get positive marketing. The employee referral bonus policy is brand marketing for the organization's managers.

How does Referring a Candidate for a Job to HR occur?

The existing employees must report to the human resource managers for referrals. The employee referral on job application needs to refer to HR, after which specific policies and factors exist. They are:

1. Referral Document

The HR needs to see certain employee referral policy documents before allowing the referral. The existing Candidate should have a minimum amount of documents essential for the referral. The company's officials will also check the referral documents of the candidate who has been referred. It will directly prove the candidate's eligibility to apply for the job position in the organization.

2. Eligibility Criteria

All companies maintain criteria for existing employees who can refer new candidates and earn incentives. The employee referral program eligibility is for the high officials of the company. The existing employees with some experience working in the company can refer new employees. The company also has eligibility criteria for the candidates who apply through the referral of employees.

3. Understand the Skills and Abilities

If the company thinks the candidate is eligible for a job, the interview process starts. The candidates need to submit their resumes after the process concludes. It is a part of the employee referral bonus policy. The organization needs to understand every candidate's ability and skills properly. The exact candidate with the most appropriate skills and capacity for the job role gets further selection. It is a time-consuming process of the entire recruitment but also essential.

What are the Guidelines of the Employee Referral Program?

The employee referral policy has certain guidelines that employees need to follow. The company analyzes all these guidelines while checking the application. The guidelines are:

  • For the existing workers, we should mention their names when they are referring to any other candidate.
  • Only an active employee has the right to receive the bonus of employee referral.
  • All companies allow a maximum of three referrals to each employee in a year.
  • Suppose the new candidate resigns from the job in three months from the date of joining. In this case, the existing employee will not get the bonus under the employee referral bonus policy.
  • If two employees refer to a similar candidate, the person who refers first will get the referral bonus.
  • The selection and interview process will follow the templates of the company. No candidates will get any referral benefits in this process.
  • It is the responsibility of the existing employee to provide the resume of the candidate to the company. The HR will collect the resume from the employee referring to the new candidate.
  • If any new candidate directly gives the resume to the manager, then it will not be an employee referral policy.
  • If the resume of the candidate who applies for a job role exists in the database of the company, then it will not be considered.

Guidelines for the company are:

  • The company should be fair in the selection process.
  • The companies should complete the entire hiring process within 90 days of referral. It is compulsory for Employee Referral Bonus Policy.
  • The senior managers and the HR are not allowed to do employee referrals. They might be on the selection team.
  • The company should keep all the hiring decisions very confidential. The company's existing employees should refrain from receiving any information about the decisions.
  • The existing employee will get the information about their bonus after selecting the candidate.

How the Employee Referral Process occurs?

For the employee bonus policy, there are certain steps the company has to maintain. These steps are:

  • The referral program will start when the company posts any vacancy for a job role. The company managers will announce the vacancy to the existing employee. The managers themselves will ask the employees to start searching for referrals.
  • The company has to share the job description with the Employees who are eligible for referrals.
  • The employees then search for candidates who are fit for the job role.
  • The existing employees take the candidate's resume and submit it to the senior managers. If the
  • The recruiting managers have to review the resume. They check whether the skills and abilities of the candidate match the job description. If the skills are appropriate for the job, the other selection process continues.
  • The existing employee should mention their name and designation on the referral resume. With the referral, they will get the opportunity to receive the bonus. It is mandatory for the Employee Referral Bonus Policy.
  • The existing employees then get a form to fill up to complete the referral process.
  • The recruiting manager checks all the details of the form and approves it.
  • After this, the interview process starts, and certain candidates get the selection for the job role.
  • The employee who refers to the candidate gets the information after the final selection.
  • If the new candidate gets the opportunity to work for the company, then the bonus is given to the existing employee after three months.
  • No bonus is paid if the new candidate leaves the company within three months.
  • The employee referral bonus adds to the salary.


The purpose of the employee referral is to give a beneficial reward to the company's existing employees. The company gets the opportunity to motivate the existing employees and receive new potential candidates for the job. The employee referral bonus policy has been beneficial for all organizations in recent times.

If you want to refer any candidate in your company and receive an incentive, ask your company manager. You should first know if you can refer any other candidate in your company. It is a very easy source of earning incentives. So, consider the policies before referring.