Curious About Retainership? Let's Explore What It Means and How It Works Together

Understanding Retainership

I would like to know about retainership. Please guide me.

Regards,
Sabal Kumar

Retainership is a form of employment that is for a particular/fixed period of time, unlike the contractual assignees. Usually, it is project-based. Suppose a company signs a contract with another company (Company B) for a specific period to render some services, and Company B requires, for example, 100 employees for one year to complete the job. In this scenario, Company A recruits employees on a retainership basis for the specified term. If the agreement with Company B is extended, the retainership automatically extends as well. However, if the agreement with Company B ends, Company A has the option to utilize the services of the retainer in Company C, if there is an opportunity.

Employees working under a retainership basis enjoy all the benefits of an on-roll employee. The distinction lies in the fact that as the company itself is not certain of continued employment, they are typically taken on a project basis.

Thank you.

Regards

Understanding Retainership

Usually, a retainer is the fixed component of a person's remuneration. It is most common in sales, project management, law firms, general consultants, etc.

Essentially, what it means is this:

Let's assume you are a lawyer. I hire you on a retainer of Rs 1 Lac per month. What this means is that for the duration of our contract, I will pay you Rs 1 Lac per month. In return, you will provide me with a certain amount of services (these are always determined and agreed upon prior to signing the contract). Let's say you may agree to write up to 8 letters, give me 2 x 1-hour face-to-face consultations, etc., per month.

Now, this is what makes retainers interesting:

Whether or not I use you for the 8 letters and 2 consultations each month, I HAVE to pay you the Rs 1 Lac each month regardless. If in some months I use you for more than what we agreed to, then I pay you the balance over and above the retainer.

So, in a nutshell, a retainer is very much like a HOLDING FEE - especially for high-net professional services.

In the case of sales, project management, and similar professions, it works fairly similarly. Why? Because if I hire a salesperson at a package of Rs 45K per month, I may only have a retainer amount of Rs 20K while the remaining 25K will be linked to performance incentives, etc. So, in this case, a retainer assumes the meaning of 'fixed component.' That is, it is the money I pay the salesperson to 'RETAIN' their services.

So, in that sense, whether it is the lawyer or the salesperson, I pay them a certain minimum amount to RETAIN their services. If I need them for more, or if they perform over and above the required minimum, then I pay them additionally.

Hope this helped you.

Regards