Understanding Recruitment Agency Fees: A Guide for Employers

Understanding Recruitment Agency Fees: A Guide for Employers

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Are you contemplating engaging a recruitment agency but feeling uncertain about how recruitment fees are structured? Dive into this guide to gain clarity.

Hiring new staff can be both costly and time-consuming, prompting many businesses to seek specialized services. While cost can be a concern, grasping the dynamics of how Recruitment Agencies in Pakistan get paid empowers employers to choose the right staffing firm that aligns with their needs and budget.

Do recruitment agencies charge a fee?

Recruitment agencies, akin to any business, charge fees for their services. In the UK, employers bear the responsibility of covering all recruitment fees. The fee’s magnitude depends on the job role and employment type, with all firms expected to pay for a successful placement.

Recruitment Costs: Temporary vs Permanent Staffing Agencies

Recruitment fees vary based on industry, salary, and whether the position is temporary or permanent. Let’s explore the typical fees associated with temporary and permanent employment agencies:

How much do staffing agencies charge?

Understanding the three main types of recruitment fees is crucial to avoid legal complications after hiring a candidate:

1. Temporary Worker Fees:

  • Basic pay (hourly or daily).
  • Associated costs (Holiday Pay, Sick Pay, National Insurance, etc.).
  • A margin or markup for the agency’s profit.

Note: The margin percentage varies by sector and location.

2. Temp-to-Perm Fees:

  • Charged when converting a temporary worker to a permanent contract.
  • Employers can avoid fees by extending the temporary hire period or hiring the temp worker without charge after a specified period.

3. Permanent Placement Fees:

  • Categorized into Contingency Recruitment and Retained Recruitment.
  • Contingency Recruitment Fees:
    • Agencies receive payment only upon candidate acceptance.
    • Typically ranges from 15% to 20% of the candidate’s first annual salary.
    • Can go up to 30% for challenging positions.

    Challenge: Agencies compete for a quick placement, favoring those with extensive candidate databases.

  • Retained Recruitment Costs:
    • Paid in three parts: upfront, upon producing a shortlist, and when the placement is made.
    • Common for roles requiring specific skills or experience.
    • Fees may equate to around 30% of a candidate’s salary.


Q: Can you avoid recruitment agency costs?

A: No, if you use a recruitment agency, you’re obligated to pay a fee. Recruiting without an agency may be costlier in the long run.

Q: How much should you pay a recruitment agency?

A: The cost depends on the role, ranging from 15% to 20% of the candidate’s first annual salary, potentially up to 30% for challenging positions.

Q: Do recruitment agencies charge candidates?

A: No, agencies are paid by employers. Job seekers should be cautious of any agency charging candidates.

Q: Will an agency offer a rebate if the candidate quits?

A: Some agencies may offer a rebate if a candidate leaves soon after employment, but this varies. Check terms and conditions for clarity.

By familiarizing yourself with how recruitment agency fees work, you can make informed decisions, choose the right service, and ensure a transparent partnership. Clarify any uncertainties with the agency and document everything in writing for peace of mind.

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