Employee Referral Policy: Meaning & Importance

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The employees know the needs and standards of the organization in the best possible way. Due to this reason, the employees may sometimes refer candidates for vacant positions in the company. The company may reward the employee if the candidate referred by that employee is selected in the organization. This process, however, cannot be done as one wishes.

The Employee Referral policy states the procedure for such referral, employee’s returns, and other rules and regulations that the employee must keep in mind. The company can use this policy as an assurance for the employees that the organization trusts their judgment. By definition, employee referral is an organized system that companies and organizations use to discover talented people by requesting their existing employees to recommend candidates from their existing networks.

The Employee Referral Policy will provide a bonus to a current employee who brings new talent to the company by referring applicants selected and employed. Employee referral programs increase internal resources and networks to find unique job candidates.

The following criteria are covered under this sample policy:

  • Employees are allowed to refer individuals who fit the given job description to the organization.
  • The referred candidate will have to go through the same recruitment process as anyone else.
  • The employee’s involvement is only limited to the submission of the resume. He is not involved in any other process.
  • The rules and the procedure for employee referral.
  • Guidelines for and calculation of the referral bonus points.
  • Exceptions to the Employee Referral procedure.

Employee Referral Policy Sample

An Employee Referral Programs are considered one of the most reliable sources of recruiting new talents. ‘Name of the Company’ believes that the current employees can most precisely understand the nature and suitability of the ideal candidates that we require. This is therefore, a guide for the employees when they find a suitable candidate and want to refer them.


This policy emphasises on rewarding the employees who help identify and refer competent talent in order to meet our resource requirements at an optimum cost.


This policy covers all employees of ‘Name of the Company’, except Functional Heads, HODs, HR team, and those involved in the recruitment process of the candidate or can influence the recruitment of the candidate.


Employee may refer individuals who fit the specifications given in job descriptions for the notified vacancies. The referred candidate will undergo the regular recruitment procedure as per the norms and selection will be considered only if he/she meets the requirements of the existing vacancy. An employee’s involvement is limited only to the submission of the resume and will not in any way try to influence the selection process or compensation finalization of the candidate.

Rules and Procedure

  • HR will notify vacancies available under employee referral scheme through HR System.
  • Candidates can be referred ONLY against the notified vacancies. The candidate referred should strictly meet the criteria as per the vacancy notified.
  • Candidate should be referred through the HR System only.
  • Employee referring the candidate should obtain the candidate’s consent before forwarding candidate’s resume to HR Department.
  • The employee will be eligible to receive the bonus points, only when the referred candidate joins the company after going through the selection process and successfully completes three consecutive months of service with the company.
  • In case the referred candidate is taken on a project / assignment based fixed term contract for a minimum period of one year, which is likely to transit into a regular employment, bonus points will be paid after the referred candidate has successfully completed training.
  • In no way should the employee referring the candidate be a part of his/her selection process.
  • Candidates who have already responded to the company’s requirement against an advertisement, or referred by a recruitment agency, or on their own in the past one year from the date of notification of vacancy, will not be considered as referred candidate.
  • In case the same resume is received from more than one employee, date and time of the receipt of the resume will be considered and the person who has sent the resume first will be eligible for the bonus.
  • In case the resume exists in the data bank, the employee will not be eligible for referral bonus.
  • Selection of ex-employees, who have left the Company, will not attract any bonus.
  • Referred candidate should not have gone through the interview process with the Company in the last six months.
  • No benefits would be credited for referring fresher’s & campus hire and candidates with less than 12 months of relevant experience.

Referral Bonus Points

* One referral bonus point is equivalent to ‘Amount’ Indian Rupee/s.
3 Executive; Officer ‘Number of points’
2 Assistant Manager; Deputy Manager; Manager ‘Number of points’
1 Sr. Manager; Dy. General Manager; Asst. General Manager ‘Number of points’


The above terms are subject to modification/ amendments/ alterations/ by the Management at any time on Business/ Statutory requirements.

In case of any doubt, the interpretation of the above terms by the Head HR shall be final. No exceptions shall be permitted without specific written approval from the Head HR.


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