A retention fee is a sum of money the practice keeps back from the associate's final pay after they've left. It typically works as follows: when the associate leaves, the practice withholds a percentage or fixed sum of money from their final pay. It's kept aside for a fixed period, often six to nine months, after which it is returned to the associate minus any deductions. The amount of money retained tends to be based on a percentage of the associate's total gross pay earned in the last six months, although the parties can agree a fixed sum too.
If no problems arise, the full sum should be returned to the associate after the agreed set period. If remedial treatment is required, it's paid for out of the pot. The deduction should be based on the cost of remedial work or refund. In other words, the charge that the associate would have normally charged for carrying out the work.
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