Please help understanding legal aspect of Employee Referral Program in an organization

Hello All HR Professionals,

I have 3 questions regarding Employee Referral Program in an organization. Can anyone help answer these questions? Is there any kind of legal aspect to it?

1. Should Contractors get a Referral Bonus in the company?
2. How should the referral bonus work country-wise? For example, if a US employee wants to refer a candidate for a UK branch, how will that work?
3. Should the hiring manager be part of the referral bonus?

Thanks,
Deepa

There is no legal aspect to the Employee Referral Program. It is purely a voluntary program. Your queries are answered below:

1. If the provisions of the Employee Referral Program allow for it, then it can be considered. But basically, the scope of the program includes only employees. Once you bring in contractors, the professional recruiting agencies you engage with can ask for a share of the pie, which is unwarranted.

2. The purpose is to reward employees who make valuable referrals, so even if such recommendations span across countries or continents, that should not be a hindrance.

3. The hiring manager is paid a salary and incentives to attract talent. Including the hiring manager would incur additional expenses that are unnecessary.

Thank you very much for your detailed answers to each query.

Regards,
Deepa

One more question regarding Point number 2 in the Referral Program (for employees across the border):

Which currency will be applicable for referring across the border? For example, if a UK employee is referring a candidate for a US branch, should they receive a referral bonus in GBP or USD?