Discussion
A friend asked me for advice about employment agency fees and I had no idea at all!
It relates to a 1 year employment contract where a daily rate will be paid and invoiced to the agency.......the agency will take 25% of the fee paid by the company and 75% paid to the worker....is this a normal distribution and is there likely to be any room for negotiation? Thanks.
It relates to a 1 year employment contract where a daily rate will be paid and invoiced to the agency.......the agency will take 25% of the fee paid by the company and 75% paid to the worker....is this a normal distribution and is there likely to be any room for negotiation? Thanks.
It's up to you, it depends on how "strong" your position is. I would look at it more from the point of view that you will be earning X amount of pounds per hour and feel that X+Y is more appropriate.. It also depends on the number of other candidates for the position and their suitability of course!! and how "desparate" the client is to fill the position, etc.. If you feel that you're in a strong position and that if you didn't get the position it wouldn't matter too much then I'd be tempted to mention that you think the rate is a little on the low side or point out any inconveniences, travel, etc... to add weight to your argument..
Thanks for the response,,,,,it is genuinely for a mate and not me 
I think the hourly rate is ok? it is just the question of the agency taking 25% of the sum paid by the emoloyer and the contractor receiving 75%....that is the part that we cannot get our heads round......
If the agency was taking 50%,,,that sounds high....really trying to guage the agency % to get a perspective on this Thanks.
I think the hourly rate is ok? it is just the question of the agency taking 25% of the sum paid by the emoloyer and the contractor receiving 75%....that is the part that we cannot get our heads round......
If the agency was taking 50%,,,that sounds high....really trying to guage the agency % to get a perspective on this Thanks.
If you consider that 11.8% of that over the NI threshold will be employer's NI, then 25% ain't that bad.
Similarly, is the daily rate based upon the time they are actually working? If so, then the agency will still have to pay them another minimum of 7.6% of their takings for holiday pay.
Depending on the exact terms as above, on the face of it 25% is a reasonably good deal. It is probably relative to the 'finders fee' involved if you were to get them to find you someone for a years contract. Worse still on that kind of deal, if they were to leave after 6 months, you would have to fork out again.
Similarly, is the daily rate based upon the time they are actually working? If so, then the agency will still have to pay them another minimum of 7.6% of their takings for holiday pay.
Depending on the exact terms as above, on the face of it 25% is a reasonably good deal. It is probably relative to the 'finders fee' involved if you were to get them to find you someone for a years contract. Worse still on that kind of deal, if they were to leave after 6 months, you would have to fork out again.
Guys, firstly, thanks for the response, my understanding is......agency invoice company...keep 25%....pay contractor 75%....contractor has to set up as self employed,,,so would be liable for own NI payments and IR35 issues.
On the basis of that, is it fair to say 25% taken by the agency is perhaps a little high????
On the basis of that, is it fair to say 25% taken by the agency is perhaps a little high????
bluevelvet said:
Guys, firstly, thanks for the response, my understanding is......agency invoice company...keep 25%....pay contractor 75%....contractor has to set up as self employed,,,so would be liable for own NI payments and IR35 issues.
On the basis of that, is it fair to say 25% taken by the agency is perhaps a little high????
Everything is relative. On the basis of that, is it fair to say 25% taken by the agency is perhaps a little high????
Do you have a better or cheaper option? If not, then their pricing is about right!
Justin,,I had to check your profile to make sure you were not a recruitment conultant.....surely it works both ways,,,my mate doesn't take the job as he feels he is being taken advantage of...they employ the next best person, who happens to be with another agency.....original agency gets nothing out of it....as from the very first post, just trying to get a perspective on this.
bluevelvet said:
Justin,,I had to check your profile to make sure you were not a recruitment conultant.....surely it works both ways,,,my mate doesn't take the job as he feels he is being taken advantage of...they employ the next best person, who happens to be with another agency.....original agency gets nothing out of it....as from the very first post, just trying to get a perspective on this.
I am trying to give a balanced perspective.At the end of the day a recruitment agency is an agency. By design you are paying them for what they facilitate, not the work they put in as such. For example, if I sell a £500k house through an estate agency, and without even advertising it the right person walks in and an offer is made the same day, they are still going to want their 1% or £5000.
They wont have done £5000 of work, but they have earnt their fee through facilitating the sale I wouldnt have got anyway.
They made a pretty penny, but I got what I wanted.
What your friend has to ask himself is whether what *he* is getting is enough *for him*. If the money is right then who cares what the agency makes! As it is, that cut will probably cover a lot of costs as I detailed above and wont end up as 25% anyway, probably the real margin is a lot less and relative to a finders fee.
After all, if you are going to look into it that far then the company that he is going to be working for is going to make some money as he is working there too. For the £50k they pay the agency he might be making the company £100k! That doesnt mean he is only being paid half of what he is worth or being short changed.
My advice would be is if what *he* is getting is enough for him, take it. If not, walk away or renegotiate. Bear in mind though that if he renegotiates, the agency may even choose to go to the employer, explain the situation and say to get the employee you really want, he wants X - so the amount the agency gets will be the same ratio, and they will end up getting more as well!
Alternatively, if they feel that the deal will fall through without your mate then they may drop 5%, 10% or whatever to seal the deal. Or, they may just choose someone else to put forward.
Edited by JustinP1 on Friday 7th March 10:11
Thanks Justin, I will pass that on....totally accept the concept of an agents worth....but their fee/ % structure is an unknown quantity to us, estate agents, apart from reputation often gain business by advertsing their fees.
On the basis of the responses, it appears their maybe some room from the 25%....if every response had said that was industy norm and even a cracking deal, then either way we would have been more clued up than at the start...thanks.
On the basis of the responses, it appears their maybe some room from the 25%....if every response had said that was industy norm and even a cracking deal, then either way we would have been more clued up than at the start...thanks.
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