I rescued some folks called manhunters. They just asked for a raise. Is there any advantage to keeping them on my payroll? I know when I recued the farmer and woman, then released them, they said thank you and that my reputation would increase.

If you want to make money hunting bandits and selling them to the slave brokers (very lucrative, btw), then you may want to keep Manhunters in your party and level them up to higher tiers. They're not required, but the benefits they bring to your party are that they're fast (cavalry) and they use blunt weapons which tends to knock enemies unconscious rather than kill them. You can't sell dead enemies to the brokers. Some mods (e.g., Floris) enable a party skill bonus system to boost prisoner management depending on the number of manhunters (and higher tiers) that are in your party.

That said, I haven't seen a benefit to manhunter faction gratitude for joining them in a fight. Conversely (depending on the version you play), there may be a benefit to having high positive faction with outlaws and bandits (i.e., they won't attack your villagers or caravans so your towns and villages prosper).

YMMV

In Warband, you get them maxed out as Slaver Chief. They ranked only slightly lower than the Mercenary Cavalry units and even better. They knock out enemies to be sold later as slaves to the nords for 50 denars a pop or ransom dealers for various prices. Knights can fetch 200 denars a person. So imagine bringing in 25 at a time 0_0

One quick mention for tactics to new players. Buy into the Trainer skill and then the Prisoner skill. When you fight bandits with prisoners, you get the option of taking on their prisoners into your group FOR FREE!! This way you level up farmers and manhunters in a pinch to fill a castle =D
How so? Park with a bunch you collected for free in a castle and your lords in your party with Trainer will level up your troops to near highest ranks in a few days. BAM! FILLED CASTLE! =D

Thanks a bunch. I am playing the original. It's nice to know they can fight when leveled up. The manhunter looks too weak at first glance. I do like to capture, but finding a broker can be a pain.

They're still weak compared to most other cavalry units. Sometimes I use them for the sake of diversity, but hunting bandits and low-tier units is all they're good at.