The HR business partner at a SaaS company in Dublin gets a message on Monday morning from the payments team lead: “We want to hire Tomasz permanently. Before he changes his mind.” Tomasz is a backend engineer based in Poland. For seven months he has worked in the team through a nearshore staff augmentation vendor; he knows the system better than half of the permanent staff and has asked himself whether a direct contract might be possible. It sounds like the easiest hire of the year. Then HR opens the vendor contract and finds a clause: no direct or indirect engagement of any person supplied by the vendor for twelve months after the end of the engagement, on pain of a fee equal to six months of the specialist’s remuneration.
Nobody read that clause at signing, because nobody was thinking about conversion then. Now HR has four questions. Is the restriction enforceable? What will it cost to agree terms with the vendor? How do we employ someone who lives in Poland? And how do we do all this without losing the engineer or the relationship with a vendor that supplies four other people?
This article answers those questions, but mainly the one worth asking earlier: how to set up the engagement from day one so that converting a specialist is a planned option, not a negotiation under pressure. We cover how try and hire works, what a conversion fee is made of, how long the trial should be, what EU and UK rules say about hiring restrictions, and what to write into the contract.
What is try and hire, and how does it differ from ordinary staff augmentation?
Try and hire, also called temp-to-perm or contract-to-hire, is a model in which a specialist starts working for the client through a vendor, and after a trial period the client can offer them direct employment. During the trial the specialist is formally engaged by the vendor and the client pays the vendor’s rate. Once the client decides to convert, the specialist moves across and the vendor receives a conversion fee, or nothing extra if the contract provides for free conversion. Our glossary has a short definition of the try and hire model.
The difference from ordinary staff augmentation is not in the specialist’s daily work but in intent and contract. In classic augmentation both sides assume the specialist stays with the vendor, and the client pays for access to their skills for as long as it needs them. The vendor naturally protects itself against a client hiring its best engineer after three months, so it writes in a non-solicitation clause. In try and hire, conversion is a planned scenario with a price agreed from the start.
The difference from recruitment matters even more. An agency presents a candidate, you hire after a few interviews and pay a placement fee. The risk of a wrong decision sits entirely with you and shows itself months later. Try and hire moves the hiring decision to the point where you have evidence from real work: code quality, communication, behaviour under deadline pressure, fit with the team.
That is why try and hire makes the most sense where a bad hire is expensive and an interview predicts it poorly: senior roles, critical to the system, that depend on working well with an existing team. For roles that are easy to fill and easy to assess, paying for a trial through a vendor is often unnecessary.
How does a conversion work step by step?
A well-planned conversion has five stages, each with an owner. The usual problem is not a missing stage but nobody knowing who owns it.
Stage one: the vendor contract, before the start. This is where you agree whether conversion is possible, after how long, at what price and with what notice. Anything left out here gets negotiated at the worst possible moment, when you already want to hire a specific person.
Stage two: the trial through the vendor. The specialist works in your team and the team lead collects observations. Agree upfront what will be assessed and when, for example a review after one month, after three months and before the decision. Without that, the decision rests on the impression of the last two weeks.
Stage three: decision and notice to the vendor. The client tells the vendor it intends to make an offer. This matters beyond formality. The vendor has its own contract with the specialist and must plan its end, and often has to replace the specialist on other commitments.
Stage four: the offer to the specialist. The client negotiates employment terms directly with the specialist. There is a trap here we come back to below: a specialist working as an independent contractor through a vendor may expect a different form and level of pay from what the client’s salary bands assume.
Stage five: transfer and settlement. The specialist’s contract with the vendor ends, the client’s contract with the vendor for that person ends, the specialist signs with the client, and the client pays the conversion fee under the contract. Access, equipment and documentation duties move smoothly because the person stays the same, but the entity responsible for the work changes.
Team communication deserves its own thought. If several specialists from the same vendor work in the team, converting one can be read by the others as a ranking. Agree with the lead that conversion decisions follow specific roles and organisational needs, and talk about them that way.
The time from decision to the first day of employment usually depends on the notice periods in the vendor contracts. If those are clear, the move can be a contract change on a single day rather than a month-long gap.
How much does converting a contractor cost?
The cost of conversion has two parts: what you paid the vendor during the trial, and the conversion fee itself. The first part is easy. In the worked example on our pricing page a senior developer costs €390 per day, and six months is 108.5 billable days, so about €42,300 for a six-month trial. That is not an extra cost; it is payment for work the specialist delivered, which you would have bought under ordinary augmentation anyway.
The second part, the conversion fee, has no single market rate. We found no independent, publicly available study that would let us state a “typical” fee honestly, so we do not give one. Instead, here are four structures you will meet in contracts and how each distributes risk.
A flat fee. One amount in the contract, independent of the specialist’s salary. Simple and predictable, but it ignores that losing a junior and losing an architect are very different losses for a vendor.
A percentage of annual salary. The fee is calculated like a permanent placement fee. For comparison, our pricing page assumes direct recruitment costs of 15–25% of annual salary and uses 20% in its worked example. The weakness is that it penalises the client for a long trial in which the vendor has already earned its margin.
A declining fee. The fee falls with every month of the engagement, reaching zero after a set period. This is the fairest structure for both sides: the vendor is protected against early conversion, and the client knows that the longer it pays the rate, the less it pays to convert.
Free conversion after a minimum period. A special case of the declining fee: after a set number of months conversion is free; before that a fee or an extended engagement applies. It fits naturally where the vendor assumes from the start that the specialist will move to the client.
An illustration only: if the contract sets a fee of 20% of annual salary, reduced by one twelfth for each full month worked through the vendor, then at an annual salary of €80,000 conversion after three months costs €12,000, after six months €8,000 and after twelve months nothing. Apply the same arithmetic to whatever terms your vendor proposes.
What drives the size of the conversion fee?
The fee a vendor will accept depends on five factors. Knowing them lets you negotiate on substance rather than trade percentages.
How long the specialist has worked through the vendor. The longer the client has paid the rate, the more the vendor has earned and the smaller its real loss on conversion. This is the main argument for a declining fee.
Seniority and scarcity of skills. A specialist in a niche technology is harder for the vendor to redeploy. A fee for converting a cloud architect will usually be higher than for a developer in a mainstream stack.
Whether the vendor planned for conversion. In try and hire the vendor has priced conversion into its business model and usually does not need a high fee. In classic augmentation conversion means losing revenue it did not expect.
The rest of the relationship. A client working with the vendor in several roles and planning to continue has a stronger hand than one converting its only contractor and ending the relationship.
Who initiated the conversion. If the specialist is looking for a change anyway, the vendor may lose them regardless of the client. A fair vendor takes that into account.
Remember too that the fee competes with an alternative: the cost of a fresh hire. Our IT recruitment cost calculator shows what recruitment and a bad hire cost. If converting a proven specialist costs less than the expected cost of hiring an unknown one, conversion is a good deal even at a seemingly high figure.
How long should the trial period be?
The trial through the vendor should be long enough to assess the specialist beyond onboarding and short enough not to lose them to another offer. In practice a sensible range is three to six months.
The first month is almost always onboarding: access, learning the domain, small first tasks. You mostly assess how the person learns and communicates. The real picture appears in months two and three, when the specialist takes independent work, joins code reviews and hits the first serious problem. A trial shorter than three months rarely tells you more than a good interview process.
A trial longer than six months has other drawbacks. Total spend on the rate grows, and a specialist who knows they are “on trial” for conversion starts looking at other offers after half a year without a decision. If after six months you still do not know whether you want to hire someone, you probably know the answer.
Write the assessment criteria down before the start. A short list is enough: which tasks the specialist should deliver independently, which quality standards they should meet, how they should work with the team. The same list helps in the conversation about conversion terms, because it shows both sides what the client is paying for.
Also think about what happens after conversion. Many employment contracts include a probationary period, but after several months of real work through the vendor a further long probation adds little and may be read by the specialist as distrust. If your jurisdiction and policies allow it, a short probation with a clear rationale, or none, is usually the better signal.
What is a non-solicitation clause and when does it become a problem?
A non-solicitation clause obliges the client not to hire, directly or through another party, specialists supplied by the vendor for a set period. It usually applies during the engagement and for some time afterwards, and breach is backed by a fee or liquidated damages.
From the vendor’s side the clause makes sense. The vendor invests in sourcing, vetting and retaining the specialist, and its business model relies on specialists working for clients through it. Without protection, a client could use the vendor as a cheap recruitment agency: take a specialist for a month and hire them without paying anything.
The clause becomes a problem in three situations. First, it offers no conversion path at all, only a ban and a penalty, so every conversion conversation begins with a threat rather than a price. Second, the penalty is unrelated to the vendor’s real loss, for example a year’s salary whether the specialist worked through the vendor for one month or two years. Third, the post-engagement period is so long that it effectively blocks the specialist in the market, which also hurts the specialist.
A good clause combines protection for the vendor with a conversion price. Instead of “no hiring, penalty X” it reads more like “the client may employ the specialist after notice and payment of a fee calculated by formula Y; employment without notice triggers penalty Z”. The penalty then protects against circumventing the contract, not against conversion itself.
The wider context of both parties’ rights and duties is covered in our article on the rights and obligations of the parties in a body leasing contract.
What do EU and UK rules say about hiring restrictions and transfer fees?
The answer depends on how the engagement is structured legally, which is why the specific clause belongs in front of a lawyer. Here are three reference points that will help you ask the right questions.
Business-to-business services contracts. Typical staff augmentation is a services agreement between client and vendor, with the specialist engaged by the vendor as an employee or an independent contractor. Between businesses, freedom of contract generally lets the parties agree non-solicitation and a fee for breach, though national law may cut down penalties that are disproportionate. The details vary by country and by the governing law you chose.
Temporary agency work in the EU. Where the specialist is a temporary agency worker assigned to the client as user undertaking, a different regime applies. Article 6(2) of Directive 2008/104/EC on temporary agency work requires Member States to ensure that clauses prohibiting or having the effect of preventing a contract of employment between the user undertaking and the temporary agency worker after the assignment are null and void or may be declared null and void. The same provision allows arrangements under which agencies receive a reasonable level of recompense for services to user undertakings. In short: hiring cannot be blocked, but the agency can be paid fairly.
Employment businesses in the UK. In Great Britain, regulation 10 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 restricts transfer fees charged to hirers. A transfer fee term is unenforceable unless the contract gives the hirer the alternative of an extended period of hire instead of paying, and it is unenforceable if the person starts working for the hirer after the “relevant period”, which is the later of 14 weeks from the first day of the supply and 8 weeks from the last day. If your vendor is a UK employment business, any conversion fee clause should be checked against these rules.
Whether a cross-border augmentation engagement with an independent contractor counts as agency work at all is a question for your lawyer, and in the UK the contractor’s status also raises off-payroll questions, which we cover in our article on IR35 and engineers from Poland. The practical lesson for HR is the same everywhere: a contract with a reasonable conversion price from the start is safer for both sides than a contract with only a ban and a high penalty.
What changes when the specialist lives in another country?
For a client in Dublin, Amsterdam or Munich converting a specialist based in Poland, the conversion is not only a commercial question but an employment-structure one. The person keeps working from Poland; what changes is who employs them.
There are three common routes. The client can employ the specialist through its own local entity, if it has one in the specialist’s country. It can use an employer of record, a provider that employs the person locally on the client’s behalf and handles payroll and social security. Or it can contract the specialist directly as an independent contractor, which avoids local employment but brings back the contractor-status questions you were trying to leave behind. In the EU, social security usually follows the country where the work is physically performed, so a foreign employer cannot simply put a Poland-based engineer on its home payroll without checking its obligations.
Each route has a different cost, and that cost belongs in the conversion business case next to the fee. An employer-of-record service has a monthly charge; a local entity has set-up and running costs; a direct contractor arrangement has compliance risk. It is not unusual for the cheapest-looking conversion to become the most expensive once the employment structure is costed.
Timing matters too. Setting up an employer of record or registering as an employer takes time. If the vendor contract ends on the last day of the month but the new employment structure is not ready, the specialist faces a gap or the client pays the vendor for an extra month. Start the employment-structure work as soon as the conversion decision is made, not after the offer is signed.
Finally, talk to the specialist about what they want. Many engineers in Poland work as sole traders and are used to that structure; some will welcome employment with benefits, others will prefer to stay self-employed. Getting the structure right is part of making an offer they accept.
When does try and hire pay off, and when is another model better?
Try and hire is one of four ways an HR business partner can bring a specialist in. Each has a different cost, speed and risk profile. The table compares them the way it is worth comparing them before you talk to the team and the vendor.
| Model | How it works | Who carries the risk of a poor fit | Time until the specialist is working | When to choose it |
|---|---|---|---|---|
| Direct hire via a recruitment agency | Agency presents candidates, client hires and pays a placement fee | Mostly the client, after any agency guarantee period | Long: recruitment plus the candidate’s notice at their current employer | Role stable for years, easy to assess at interview |
| Success fee through a staffing vendor | Vendor sources a specialist for direct employment, payment only on a successful hire | Mostly the client after hiring | Depends on market and role | Client wants a permanent hire but needs access to the vendor’s network |
| Try and hire | Trial through the vendor, then conversion on contract terms | Vendor during the trial (replacement), client after conversion | Short: starts like staff augmentation | Critical role, expensive mistakes, need to start fast |
| Long-term staff augmentation | Specialist stays with the vendor, client pays the rate as long as needed | Vendor (replacement, cover) | Short | Temporary need, uncertain horizon, scarce skill |
The table points to a simple rule. Try and hire pays off when you want the specialist on your payroll but do not want to decide on the strength of three interviews, and when you need them working sooner than a recruitment process with a notice period at their current employer allows. It does not pay off for roles that are easy to assess and fill, or when you know from the start that you need the skill only for a few months.
A side-by-side look at augmentation and hiring, including time to fill and the cost of a bad hire, is on our page staff augmentation vs recruitment.
What should the vendor contract say before the specialist starts?
The cheapest moment to agree conversion terms is the day before you sign. Seven clauses prevent most later disputes.
Whether conversion is allowed. A clear sentence that the client may employ the specialist, with the conditions. Without it, the non-solicitation clause is the only reference point.
The conversion fee formula. Flat amount, percentage of salary or declining fee, with a worked example in an annex. A numeric example removes interpretation disputes better than the most careful definition.
A minimum period before conversion. If the vendor wants protection against very early conversion, a minimum period of work through the vendor is better than a prohibitive penalty.
The notice procedure. To whom, in what form and with how much notice the client announces its intention to make an offer. This protects the relationship: the vendor should not learn of the conversion from the specialist.
Scope and duration of the non-solicitation. Who it covers (only people supplied to the client, or all vendor staff), how long it lasts after the engagement, and what penalty applies for bypassing the conversion procedure. The penalty should be linked to the conversion fee, not detached from it.
Hiring by affiliates and other vendors. Whether employment by a group company or through another of the client’s suppliers counts as conversion. This is a frequent source of disputes, and with employer-of-record arrangements it becomes even more relevant.
Replacement during the trial. What happens if the specialist does not work out before conversion. In try and hire the vendor should provide a replacement on the same terms as in ordinary augmentation, with the trial restarting for the new person.
What mistakes do companies make when converting contractors?
Five mistakes recur often enough to know them before you talk to the team.
Talking to the specialist before the vendor. The team lead tells the specialist “we want to hire you” before anyone has read the contract. The specialist tells the vendor, the vendor feels bypassed, and negotiation starts from conflict. The order should be reversed: contract, vendor conversation, offer.
Leaving the trial cost out of the comparison. The company compares the conversion fee with an agency placement fee and concludes try and hire is more expensive, ignoring that during the trial it received work it would have paid for anyway and avoided the risk of a bad hire.
An offer built on salary bands, not the market. A specialist who earned market contractor rates through the vendor receives an offer at the bottom of the band. The conversion fails and the relationship is strained.
Converting without a knowledge plan. The specialist moves to employment, but some documentation and accounts were run by the vendor. On the day of the switch, tools, accounts or knowledge of who agreed what disappear. Plan the move like a new starter.
No review after conversion. A specialist who thrived as a contractor has different expectations as an employee: a career path, reviews, a voice in decisions. Companies that treat conversion as the end of the process lose these people within a year.
How does ARDURA Consulting approach try and hire?
Try & Hire is one of the four engagement models in ARDURA Consulting’s body leasing offer: a trial period with the option of moving the specialist to permanent employment, so you can test before you decide and convert to a permanent role. On our page comparing staff augmentation vs recruitment we list the same principle: try before you hire, and convert to permanent if desired.
Alongside it we offer a Success Fee model, where you pay only if the specialist is successfully hired. That suits companies that want a permanent hire from the start and need access to a network of more than 500 vetted specialists, but do not need a trial through a vendor.
During the trial the same rules apply as in every staff augmentation engagement: specialists pass our 5-stage vetting process, and you interview and approve every candidate before the start. If a specialist is not the right fit in the first 2 weeks, we replace them at no cost, and if a specialist leaves during the engagement, we guarantee a replacement within 5 business days.
Our pages do not publish a fixed conversion fee. So before you sign, with us or with any other vendor, ask for the conversion terms in writing, in line with the principle this article recommends: conversion should be a planned option with a price known from day one, not a negotiation after the fact.
How should you prepare the conversion decision?
Back to the HR partner in Dublin. She has a contract with a non-solicitation clause and a penalty, a specialist who wants to move, and a vendor the company wants to keep working with. The best move is not to look for a loophole but to talk to the vendor about a conversion price, with arguments: seven months in which the vendor earned its margin, the specialist’s own initiative, continued work in four other roles. In parallel she should start the employment-structure work for a Poland-based employee. If the vendor insists on the full penalty, a lawyer should check it against the governing law, and against the agency-work rules if they apply. And the next contract should carry a conversion price from day one.
Remember five things. First, try and hire moves the hiring decision to the point where you have evidence from real work, and it makes most sense for critical roles that interviews assess poorly. Second, the cost is the trial at the vendor’s rate plus the conversion fee, and the fairest fee structure declines with the length of the engagement. Third, a sensible trial is three to six months, with criteria written down before the start. Fourth, non-solicitation should protect against circumvention, not block conversion; for agency work EU law explicitly requires blocking clauses to be void, and UK rules restrict transfer fees. Fifth, order matters: contract, vendor conversation, employment structure, offer.
More on recruitment and sourcing models is collected in our IT recruitment hub. If you plan to fill a role with try and hire, see our staff augmentation services or book a call to discuss the conversion terms before the specialist starts.