We’ve all had them, the invoice sent by a Recruitment Agency when one of your managers has taken on a staff member that was provided on a temporary basis through the agency. These can range from as little at £1,500 through to £10,000 and above depending on the role and agency that provides them. Irrespective of the fees, this can leave a bad taste in the mouth of the hiring manager, HR and Finance departments and also the agency providing the person as the ensuing realisation of the fee the manager has triggered sinks in and the often heated negotiation that follows.

However, these fees should never be a surprise! All agencies are governed by a set of regulations called ‘The Conduct of Employment Agencies and Employment Businesses Regulations 2003’ – it’s great bedtime reading and certainly a cure for insomnia, if you are not sleeping too well at the moment thinking about funding cuts!

These regulations set out how agencies should operate and it has a specific section on the dreaded ‘Temp to Perm’ fees. These have been designed to protect and benefit both parties ensuring fairness and transparency with a whole section on restrictions on charges to hirers. The legislation is written to ensure that if an agency worker is taken on directly that the hirer can take these people on within a clear notice period, referred to as an ‘Extended Period of Hire’ and to ensure that agencies can still charge fees for the recruitment work they have undertaken.

On the engagement of any agency worker, the agency should provide you with a set of terms and conditions and in these terms should be the following:

  • That they comply with the Conduct regulations
  • What is the ‘Extended Period of Hire’ should you wish to take on an agency worker
  • What the ‘Temp to Perm’ fee will be if you do not opt for an ‘Extended Period of Hire’

Once you know this you can manage how you take on any agency workers and assess what is the most cost effective option.

The legislation does not set out how long an ‘Extended Period of Hire’ should be except that it should be reasonable. As such ‘Extended Periods of Hire’ can range from as little as 120 worked hours through to 12 months.

However, should you notify an agency that you wish to take on an agency worker, then they must offer you an ‘Extended Period of Hire’ as well as what the Temp to Perm fee should be, should they not, then the Temp to Perm fee may be unenforceable.

Beware though, should you take the agency worker on without notifying the agency in advance, then the need to offer the ‘Extended Period of Hire’ goes out the window.

My advice before taking on any agency worker to your own contract is:

  • Know what contracts you have with your agencies
  • Know what the ‘Extended Period of Hire’ is
  • Know what the Temp to Perm fees are

Once you know this you can quite easily calculate what is more cost effective for organisation, either continuing to pay the agency fee over the duration of the ‘Extended Period of Hire’ or paying the Temp to Perm fees.

Where your managers make the hiring decisions, it is important that they understand the rules, so you don’t get hit with unwanted Temp to Perm fees when you could have taken them on for a fraction of the cost.

So, in answer to my initial question: “what IS a fair recruitment fee?”, well; a fair fee is the one you knew was due when you first engaged the agency worker, but it should always be set out by agencies at the beginning to give you a choice should you wish to take them onto your own books. If the fee seems too high, then negotiate!

Should you want to discuss further rules and regulations around fees charged by agencies, feel free to give me a call…

Jamie has worked in FE sector recruitment, with Protocol, for nearly 20 years and been Protocol’s Head of Implementation & Training since 2006. Jamie is a highly experienced and knowledgeable professional with particular expertise in safeguarding, agency worker and employment regulations.

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