Have you ever wondered how a recruitment agency for finance makes money?  There are different ways recruitment firms make money and they also have different models of charging for their services. Employing a new employee can be a time-consuming and expensive process – leading businesses to hire specialist services.

Do staffing agencies charge a fee?

Staffing agencies are businesses just like any other business. This means that they charge a fee for their services. Employers are responsible for the recruiting costs. The role of the job and the type of employment determines the level of fees charged by staffing companies.

Recruitment costs

Recruitment costs vary depending on the salary and industry and whether the job is permanent or temporary.

How much do recruitment agencies charge?

Recruitment agencies exist in three main types and these can be broken down into permanent placement fees, temporary worker fees and temp to perm fees. Having an understanding of these costs can help you avoid potential legal proceedings after you have recruited a candidate.

Temp to perm fees

There may be some circumstances where an employer wants to charge a temporary employee’s contract into a permanent one. There is a fee for that. It is important to remember that temporary employees are technically employed by the recruitment agency, so when a client wants to take a temporary worker full-time, the staffing agency is entitled to charge a transfer fee.

There are two main ways that employers can avoid paying a transfer fee. A recruitment agency is obliged to offer employers the chance to extend the length of the temp hire. If the employer selects this option then no fee will be payable upon the competition of the extended period.

Employers can hire a former temporary worker for free, eight weeks after completing the assignment or fourteen weeks from the beginning of the assignment. It is not uncommon for clients to introduce a temporary employee to another business.

Temporary worker fees

Temporary workers fall under the responsibility of the staffing agency. This means that it is the staffing agency that pays the candidate. The agency recoups this money from the employer and commands a fee that covers the costs they stand to pay. A temporary fee may consist of the basic pay and other associated costs, and the margin is a percentage on top of the agreed basic pay that enables the agency to make cash.

Permanent placement fees

Permanent hire fees tend to fall into retained recruitment and contingency recruitment. Contingency recruitment is very common and straightforward. It is where a recruitment agency finance only gets paid once the candidate has been accepted for the job. On the other hand, retained recruitment fee involves the agency being paid a retainer fee if the role requires a particular set of experience and skills.