Are you thinking of using a recruitment agency, but unsure what you should be paying? Or maybe you want to benchmark your existing agency fees?
If that sounds like you, then read on…
Recruitment agencies in the UK play a pivotal role in matching employers with suitable candidates and, as a business seeking to fill a vacancy, a recruitment agency can save you time, get you access to great candidates and do a lot of the hard work for you.
Cost is always a critical factor in this decision. Typically, recruitment agencies in the UK charge a fee based on a percentage of the annual salary of the role you are looking to fill. This model is generally aligned with the interests of the recruiter and their clients, however it can push recruiters to be more biased towards their candidates and “push up” the salary expectations, which in turn pays the recruiter a greater commission.
The percentage charged by recruitment agencies can vary widely depending on several factors, including the level of the position being filled, the industry sector, the type of contract, and the individual agency’s pricing structure. For permanent positions, it’s common to see fees ranging from 10% to 30% of the appointed candidate’s first-year salary. Lower percentages are often associated with entry-level positions, while higher fees are usually linked to executive-level or specialist roles which are more challenging to fill.
For temporary or contract roles, agencies may charge differently, often opting for a markup on the contractor’s hourly rate rather than a percentage of annual salary. This fee covers the agency’s services for sourcing and placing the candidate, as well as administrative costs such as payroll processing and statutory contributions. It’s vital to understand the fee structure of an agency before entering into an agreement to ensure that their services align with your financial expectations and recruitment needs.
Overview of UK Recruitment Agency Fees
In the UK, recruitment agency fees are typically influenced by various factors and differ according to the type of recruitment service provided.
Factors Influencing Agency Fees
The fees you might encounter when working with recruitment agencies in the UK can vary significantly. One of the primary determinants is the salary of the position you are looking to fill. Agencies often charge a percentage of the agreed-upon annual salary, which can range roughly from 10% to 30% for permanent placements. Temporary worker fees tend to be calculated as a markup on the worker’s hourly rate.
Industry specialisation can influence fees as well; niche sectors or roles that require highly skilled candidates can attract higher fees due to the expertise and effort involved in sourcing suitable candidates.
Another factor to take into account is the level of service required: contingency recruitment or retained recruitment. Contingency recruitment means the agency only charges a fee upon the successful placement of a candidate, whereas retained recruitment involves upfront payments to secure the agency’s dedicated services, often used for executive-level searches.
Fee Structures for Hiring
When you engage with recruitment agencies in the UK, understanding the fee structures for hiring is crucial. Agencies typically offer three main fee structures: contingency, retained recruitment and contract recruitment.
Contingency Recruitment Fees
Contingency recruitment fees are only paid when a candidate is successfully placed within your company. Here’s how the fees typically break down:
- Placement Fee: Usually a percentage of the candidate’s first-year salary, ranging from 10% to 30%.
- Rebate Scheme: Some agencies offer a sliding scale refund if the candidate leaves within a certain period, for example:
- 100% refund within the first month
- 75% refund in the second month
- 50% refund in the third month
- No refund after the third month
Agencies operating on a contingency basis generally do not charge candidates.
Retained Recruitment Costs
Retained recruitment costs are structured differently:
- Retainer Fee: Paid upfront, usually a portion of the estimated full placement fee.
- Remaining Balances: Typically paid upon completion of different recruitment milestones.
- Advertising and Job Boards: Some retainer fees are inclusive of costs for advertising the role and using job boards, while others may charge additionally.
This structure is common for specialised or high-level job market needs.
Temporary or Contract Recruitment Fees
Temp or Contract recruitment operates under a different fee structure where the agency assumes the responsibility for paying the staff wages and subsequently bills the company a fee for this service. Here’s how the fees typically work:
- Hourly Billing Rate: The company is charged an hourly rate for each hour worked by the contractor. This rate includes the contractor’s wage plus a markup for the agency’s services.
- Day Rate: Or for more white collar professions, it is very common in IT or Finance, contractors will be charged by the day. Again the fee will be the contractor’s wage plus a markup for the agency’s services. If an employer wants to take on that contractor full time there is normally an additional “finders fee”
- Contract Length: Fees are continuous for the duration of the contract, which can vary in length depending on the company’s needs and the specific project.
Financial and Operational Advantages
Recruitment agencies in the UK offer a blend of financial and operational advantages, including potential cost savings and enhanced productivity. They provide tailored solutions that can directly affect your revenue positively and ensure the quality of new hires.
Cost-Benefit Analysis for Employers
Cost Savings: Utilising a recruitment agency can streamline the hiring process, leading to significant time savings. This time can then be redirected into revenue-generating activities. Specialist agencies have often built relationships and have a network of candidates within a certain niche which can reduce the likelihood of making a costly hiring mistake.
Placement Fees: Typically a percentage of the hire’s annual salary, these fees are incurred only when a successful placement is made.
- Turnover Reduction: By providing better-matched candidates, agencies can reduce turnover, which can be quite expensive considering the cost of rehiring and retraining.
Understanding the Rebate Structure
Rebate Period: Agencies offer a rebate structure which is a period during which you can claim back a portion of the placement fee should the new hire leave the organisation.
- Within this period, the rebate percentage typically decreases with time.
- Underlines the agency’s commitment to placing candidates who will stay long term.
The rebate is a safety net that reinforces the value of using an agency, providing peace of mind and financial protection against early employee turnover.
Alternative Recruitment Options to Agency Fees
When someone in the team leaves, engaging with a Recruitment Agency is the most common next step, but also usually the most expensive option. Below we explore some cheaper alternatives.
Generalist Job Boards: There are lots of job boards in the UK that allow employers to advertise their vacancy, they range in cost from free to a few hundred £’s. Premium sites like Totaljobs and Reed have millions of jobseekers on their site everyday.
Specialist Job Boards: Or you can pay a premium of between £250-£500 and advertise on more specialist job boards like CW Jobs for IT roles or CharityJob for the non profit sector which have smaller but a more specialised audience.
Employee Referral Scheme: A typical scheme may pay the “referrer” £200-£500 as an incentive to recommend you as a place to work. You can tap into your employees existing network. The great thing about these schemes is that people will feel a sense of responsibility for the person they refer, so only refer good people.
Social Media Advertising: It is worth putting a job advert out on your social media channels, although it will typically only go to people that follow your pages, it is completely free. If you can advertise in a way that will get engagement you can get greater reach and visibility.
Networking and Existing Networks: Use your existing professional networks, people you have worked with previously or get out and attend industry events where you can meet great talent.
Apprenticeships: Depending on the level of the role you may be able to use apprenticeship schemes to find great entry level talent. Often the apprenticeship provider, who run the education element of an apprenticeship, will offer a free recruitment service alongside their service. This can be very cost effective with government incentives and subsidies to take on apprentices.
Or you can use Get Staffed from £199…
At Get Staffed we offer affordable recruitment services, giving you the tools used by recruiters to hire great staff yourself.
- The Best Advertising Coverage – we use the largest network of UK job boards to get your adverts the best chance of being seen by your perfect candidate.
- Advert Writing / Optimisation – we can help you write an optimised job advert, giving it the most chance of being found and making candidates want to apply to your vacancy.
- CV Database Search – Not only do we give you the best advertising coverage we also have access to CV databases with passive candidates who might be ideal for your roles.
- Free Applicant Tracking System – with each campaign you get a free applicant tracking system which allows you to manage applications in one place, you can even add as many people to your hiring team as you like.
- Pre-Qualify Candidates – ask candidates to answer up to 5 qualifying questions as they apply, so you can spend more time with the most suitable applications.
- AI Candidate Shortlisting – our helpful AI assistant will review each qualified candidate as they apply so you don’t have to spend hours reviewing each CV.
Alternative recruitment options with Get Staffed:
Get Staffed offers a dynamic approach to recruitment that blends traditional and innovative strategies, tailored to meet the evolving demands of modern businesses. Here’s how our services stand out:
- Hybrid Recruitment Model: This model integrates the advantages of both contingency and retained recruitment services. By minimising upfront costs and providing dedicated support for specialised positions, this approach offers flexibility and efficiency in recruitment processes.
- Direct Job Board Posting: Get Staffed advertises vacancies directly on all major UK job boards, ensuring wide visibility and attracting a diverse pool of candidates. This broad reach is crucial for tapping into the best talent available.
- Referral Programs and Social Media Engagement: Utilising existing employee networks through referral programs, coupled with a strong presence on social media platforms, enhances the recruitment process. These methods not only widen the candidate pool but also leverage the personal networks of current employees for trusted recommendations.
- In-House Talent Acquisition Teams: Get Staffed supports businesses in hiring or augmenting their in-house recruitment teams. These professionals support all aspects of the hiring process, from posting jobs to refining your employer brand proposition, ensuring a cohesive and attractive message is conveyed to potential candidates.
- Advanced Recruitment Technologies: With features like a free Applicant Tracking System (ATS), video screening, and AI-driven candidate screening, Get Staffed streamlines the hiring process. These technologies improve the efficiency of selecting suitable candidates and reduce the time-to-hire, allowing companies to quickly onboard the best talent.
- Transparent and Inclusive Service Package: All essential services, including background checks and skills assessments, are covered within Get Staffed’s main fee. This all-inclusive approach eliminates unexpected costs, making financial planning for recruitment straightforward and reliable.
By choosing Get Staffed’s comprehensive recruitment solutions, companies benefit from an effective blend of traditional practices and cutting-edge technologies. This not only fills positions with capable individuals more swiftly but also supports a sustained improvement in workforce stability and productivity, ultimately enhancing the long-term financial health of the business.
Comparative Cost Analysis
