August 11, 2020

money for recruitment agencies

The cost of a recruitment agency to an employer will really depend on the role being filled. Recruitment costs can range between 15% and 20% of an employee's first annual salary, but this can be as big as 30% for niche positions.

The percentage charged roughly reflects the advertised salary according to cv-library.

Example of recruitment agency costs

Junior role – advertised salary £10,000 Agency fees would be around 10%, so you would pay £1,000 per hire

Executive role – advertised salary £20,000 Agency fees would be around 15-20%, so you could pay up to £4,000 per hire – these tend to be the most common fees

What are the types of recruitment agency fees?

The percentage fee discussed in the previous section can also vary depending on the type of hire.

There are three main types of recruitment fees:

  • Temporary worker fees
  • Temporary-to-permanent worker fees
  • Permanent worker fees

Temporary workers 

Temp workers are the responsibility of the agency, so they will be pay them directly. The agency then reclaims the wages, plus a percentage to cover costs, from the employer.

There is no set percentage for a temp hire; it’s heavily dependent on the industry or location.

Temporary-to-permanent workers 

As the recruitment agency technically employs the temp worker, should you want to transition a temp into a permanent role, you’ll have to pay a fee to do so.

Temp-to-perm fees are a little more complicated, but you can find full details at GOV.UK

Permanent workers 

For permanent workers, fees split into two more categories. Most common is contingency recruitment, in which the employer pays the agency when they make a successful placement

The other is retained recruitment. In this scenario, agencies are paid in stages, often upfront, once they produce a shortlist of candidates.

The final payment is then made when they place someone. What’s the difference? Contingency recruitment pushes the agency to make a hire quickly, as the employer only pays them upon a successful placement.

On the other hand, retained recruitment and making an upfront payment means agencies can spend more time searching for the perfect candidate.

Example of costs

Based our survey on 2 hypothetical jobs we are looking to fill:

1. Permanent Contract – £50K p/annum

2. Temporary Contract (6 mths) – £50K p/annum

Permanent Contract 

Our respondents said that they would seek between 15-20% (£7,500 – £10,000) for normal roles, and up to 25% of the first year’s salary (£15,000) for harder to fill roles .

Temporary Contract

If you were looking to fill a temporary one-off contract (6 months) with a salary of 60k per annum, on average you will be charged between 12-15% (£7,200 – £9,000) of the annual salary (not just the 6 months’ they would be earning for).

For project or temp roles (paid on a daily basis), for example if they were earning £300 per day, the recruitment agency would charge 15% (£45) commission.

We will be delighted to discuss your recruitment requirements, you can contact us on 07375 097443 or e-mail enquiries@lbjconsultants.co.uk. We have recently helped clients save thousands of pounds over recruitment costs.

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