Recruitment agency fees (and other T&Cs)

[sarasorrento]

Hi Guys

I am considering using a recruitment agency to find me a senior manager. If I go ahead, this will be the first time I have used an agency.

Upon a successful apointment, a business acquaintance has advised me that I should expect to pay the agency around 20% of the candidate's first year salary.

Are they correct? And are there any other T&C conditions that could trip me up that I should be aware of?

I want to make sure I am prepared before I take this major step.

Thanks, Sara

 

[Paul_Rosser]

I've worked with a few and avoid the ones who ask for payment once the apointment has been made.

You should only pay once the candidate has successfully passed a probation period (3/6 months depending on the position), otherwise you may end up paying 20% for someone who leaves in the first few weeks or who isn't suitable for the role.

 

[Young Recruit]

Hi Guys

I am considering using a recruitment agency to find me a senior manager. If I go ahead, this will be the first time I have used an agency.

Upon a successful apointment, a business acquaintance has advised me that I should expect to pay the agency around 20% of the candidate's first year salary.

Are they correct? And are there any other T&C conditions that could trip me up that I should be aware of?

I want to make sure I am prepared before I take this major step.

Thanks, Sara

I think recruitment agencies are an expensive way to find staff.

Yes they can save you some time by producing job descriptions, job adverts and finding CVs, but these are things you can and I think should learn to do yourself.

If you understand the recruitment process it will help you in the long run. You can learn to take a systematic approach to recruitment by first determining your needs, creating a job and person spec, and then choosing appropriate selection tools to test the candidates.

JA

 

[Deleted member 138423]

Hi Guys

I am considering using a recruitment agency to find me a senior manager. If I go ahead, this will be the first time I have used an agency.

Upon a successful apointment, a business acquaintance has advised me that I should expect to pay the agency around 20% of the candidate's first year salary.

Are they correct? And are there any other T&C conditions that could trip me up that I should be aware of?

I want to make sure I am prepared before I take this major step.

Thanks, Sara

Firstly, you are in control of the fee that you will pay. When after you've researched the recruitment companies and have found the right one to work with, you can then negotiate the fee.

Typically this fee will be between 10 - 30% depending on the level and skill set of the individual you have asked them to find you, so you negotiate the fee before anything happens.

You should try to make sure that they work on contingency which will mean that you only pay them after someone has been appointed by you. If they provide you with a number of candidates but you don't appoint anyone, you will not have to pay, so make sure that you arrange this first. You will be asked to sign an agreement by the recruiter so check that carefully and quetion anything you are unsure of!

Once you appoint someone, and only after they have started in your employ should you then pay the recruiter's fee. Don't pay before this! On another note, if the recruiter asks you to pay a percentage up front because of the difficulty in finding someone, don't, as in my estimation, you do not need to pay for a Senior Manager.

Finally, there will be a rebate system so check the agreement you sign, if there is not one, walk away! The rebate system works on the principal that you pay the full fee once the candidtae starts in your employ. If they then leave, not if you sack them, within a set period of time, usually 3 months, the recruiter will refund some of your fee on a sliding scale, so if they leave in week one, full refund, in month two, 30% etc...

If you require any further advice, feel free to PM me!

 

[Richie N]

I've worked with a few and avoid the ones who ask for payment once the apointment has been made.

You should only pay once the candidate has successfully passed a probation period (3/6 months depending on the position), otherwise you may end up paying 20% for someone who leaves in the first few weeks or who isn't suitable for the role.

Actually this is bad advice as you would be in breach of the agency Terms of Business.

You have to pay the invoice within their payment terms and then you would be entitled to a rebate or free replacement within the rebate period.

You should be able to get an agency down to 15%, if not lower in the current climate.

 

[Paul_Rosser]

Actually this is bad advice as you would be in breach of the agency Terms of Business.

You have to pay the invoice within their payment terms and then you would be entitled to a rebate or free replacement within the rebate period.

You should be able to get an agency down to 15%, if not lower in the current climate.

I didn't say don't pay them if their T&C's say you have to on appointment.

I said you should only pay once their probation has been passed and this should be reflected in the T&C's from the agency and to avoid those who don't.

 

[Richie N]

I didn't say don't pay them if their T&C's say you have to on appointment.

I said you should only pay once their probation has been passed and this should be reflected in the T&C's from the agency and to avoid those who don't.

Agencies will not wait 12/13 weeks for payment, this would be a breach of their Terms of Business.

I can't see any agency amending their terms to accommodate this.

 

[Paul_Rosser]

Agencies will not wait 12/13 weeks for payment, this would be a breach of their Terms of Business.

I can't see any agency amending their terms to accommodate this.

Of the 20 odd agencies I've worked with only 3 refused to accept these terms and 5 or 6 even offered them as a standard.

But that just my personal experience of working with agencies when looking to recruit staff in the £50k to £100k salary range.

An agency should be looking to form a relationship with you, rather than just making a quick buck...but the market is full of those who just want their cash and don't really care about placing the right staff.

 

[Richie N]

Of the 20 odd agencies I've worked with only 3 refused to accept these terms and 5 or 6 even offered them as a standard.

But that just my personal experience of working with agencies when looking to recruit staff in the £50k to £100k salary range.

An agency should be looking to form a relationship with you, rather than just making a quick buck...but the market is full of those who just want their cash and don't really care about placing the right staff.

I agree it's not all about making a quick buck but that's why there is usually a guarantee period in place, personally we offer a free replacement as well as the rebate.

Payment terms is irrelevant but making an agency wait until the candidate has passed their probation is not good imo.
I personally wouldn't work with clients that expect you to wait 3 months until you get paid.

Is that how your business works, would you wait 3 months for payment from your customers??

 

[Walkol]

Paul is right, it can depend on the agency. We appointed someone on a similar pay bracket a couple years back, where payment was 3 months after the employee started. They left 16 months after started, so we recovered 25% of the fee.

However, we just appointed a standard member of staff, with a fee of 15% (they initially we're after 30%), payable within the standard terms.

While we do use agencies, I think it is, if possible, much wiser to try and recruit using your employees contacts, offering a referral fee, which can be substantially lower than agency fees.

 

[Paul_Rosser]

For my current business it's usually around 90 days from doing the work for a client before I get paid.

At my last firm they had 60 day payment terms, so yes it is quite normal.

If a company has proper fee forecasts, then waiting 90 days wouldn't be a problem for them, in my experience it's only pushy agencies who want their comission straight away, so wouldn't use them.

 

[Paul_Rosser]

I personally wouldn't work with clients that expect you to wait 3 months until you get paid.

So you would turn down clients who would be passing £100k+ of fees your way each year, just because they wanted 90 day payment terms ?

Maybe at the smaller end of the market where fees are 2k-3k per appointment and the agencies are smaller then 30 days is normal from the time of placement, but certainly when placing high salaried staff (£50K+) most decent agencies will accept payment after a probationary period has been passed.

They left 16 months after started, so we recovered 25% of the fee.

As Walkol rightly said, you should also expect some terms which give you a partial rebate should the member of staff leave within 2 years.

 

[Richie N]

We deal with the smaller end of the market, £2-3k fee so yes I wouldn't wait 90 days for payment for this.
I have done my work, spent money on advertising and my time, so I would want paying. I still offer my clients a guarantee period, it's not about a quick buck and it's certainly not pushy.
The rebate period is there to protect both parties, not just the client.

 

[Paul_Rosser]

We deal with the smaller end of the market, £2-3k fee so yes I wouldn't wait 90 days for payment for this.

I have done my work, spent money on advertising and my time, so I would want paying.

I still offer my clients a guarantee period, it's not about a quick buck and it's certainly not pushy.

The rebate period is there to protect both parties, not just the client.

On a £2k-£3k fee I would be ok with a firm who offered a guarantee period.

My original comments were just some things for the OP to watch for as the job sounds quite highly paid and on 20% this could result in a big fee for the agency.

So to summarize make sure you choose an agency either lets you pay after the probation period, or offers you a guarantee that if the member of staff leaves before the end of the probation period you get a refund in full.

 

[sarasorrento]

Bit more info for you - the basic salary I am looking to pay is circa £40k (plus a bonus, which I guess does not come into this discussion).

Sara

 

[Deleted member 138423]

Bit more info for you - the basic salary I am looking to pay is circa £40k (plus a bonus, which I guess does not come into this discussion).

Sara

Again, you need to negotiate! Most agencies will charge you a %age of the salary not including any bonus or add on, but some however will. Before you do anything, you need to have it in writing what you will be paying what ansd for what!

 

[Paul_Rosser]

Don't mention bonuses to the agent, on 40k you will be looking at around 6-8k in comission.

But haggle with them to get it down a bit, you can even use a bit of waffle 'I'm looking for someone to put on our prefered agency list..' Etc. As if they think there will be more fees to come they should be more reasonable on the %.

Make sure you get any T&C's checked so you understand exactly what you have to pay and when. Also what you get back should the member of staff leave during the first 3/6/12/24 months.

 

[sarasorrento]

Thanks for all of your help, I now feel much better prepared.

Sara

 

[Viking55]

Hi Guys

I am considering using a recruitment agency to find me a senior manager. If I go ahead, this will be the first time I have used an agency.

Upon a successful apointment, a business acquaintance has advised me that I should expect to pay the agency around 20% of the candidate's first year salary.

Are they correct? And are there any other T&C conditions that could trip me up that I should be aware of?

I want to make sure I am prepared before I take this major step.

Thanks, Sara

Hello Sara,
I have just been in touch with an agency to search for an HSQE Advisor - they have just returned and they want 22% of the annual salary as their 'appointment fee' .
I am awaiting the full T&C's before we go down this route as it seems rather an extortionate fee to me.
Will post when I get an update - in the meantime - I have reached out to other agencies and asked the question - what percentage do you charge for sourcing and appointing a candidate.
As mentioned
Will post when / if I get a response
KR
Eric

 

[Paul FilmMaker]

Hi Guys

I am considering using a recruitment agency to find me a senior manager. If I go ahead, this will be the first time I have used an agency.

Upon a successful apointment, a business acquaintance has advised me that I should expect to pay the agency around 20% of the candidate's first year salary.

Are they correct? And are there any other T&C conditions that could trip me up that I should be aware of?

I want to make sure I am prepared before I take this major step.

Thanks, Sara

20% is normal. They might start by asking for 25% but 20% is pretty standard. Most agencies will have Ts&Cs meaning if the candidate doesn't last their probation, they'll find you another candidate.

Thing about agencies is they source candidates for free by advertising and then get a fee once you hire them. So I'd personally go down the advertising route initially.

What area of expertise are you looking at?

 

[MikeJ]

Thread is a year old...

 

[Paul FilmMaker]

Thread is a year old...

Oops... It popped up and I wasn't paying attention..,.

 

[JEREMY HAWKE]

Thread is a year old...

Its 13 years old Mike and poor old Sara still trying to decide if she should take this major step

 

[ethical PR]

Hi Guys

I am considering using a recruitment agency to find me a senior manager. If I go ahead, this will be the first time I have used an agency.

Upon a successful apointment, a business acquaintance has advised me that I should expect to pay the agency around 20% of the candidate's first year salary.

Are they correct? And are there any other T&C conditions that could trip me up that I should be aware of?

I want to make sure I am prepared before I take this major step.

Thanks, Sara

Obviously ask the agency to send you their contract and terms before engaging them this will give you the information you need

 

[IanSuth]

ok ex recruitment consultant of 27 years here with industry qualifications (certificate and diploma in recruitment practice)

Standard fees likely 20, you willl be able to get to 15% easy and any less than that you should expect to have to give something in return. Personally i don't think sole agency agreements are a good thing - i would ave 2 decent agencies battling out to keep them keen (and nobody has access to all applicants).

All will have a refund guarantee and this is what you will find easier to negotiate than payment terms (particularly look for a clause in terms stating rebates are dependant upon payment having been within terms and don't pay late) - you should be able to get a free replacement for first 6 mths half off 6-12 if you promise to let that agency refill the role.

BUT - what type of person are you looking for as you may be able to DIY dependant upon how much time you have to sift cv's and interview etc.

 

[IanSuth]

Obviously ask the agency to send you their contract and terms before engaging them this will give you the information you need

This was a legal necessity for a while and definitely you should agree terms before agreeing any interviews (that is actually when they kick in)

 

[IanSuth]

Thing about agencies is they source candidates for free by advertising and then get a fee once you hire them. So I'd personally go down the advertising route initially.

they don't, other than Indeed they pay for advertising and sometimes quite a lot - def less than it used to be but still a lot.

Back in the day of mainly print ads we would pay £250 for the little (think 4 xmas postage stamps) unused bits of space in computer weekly to advertise in and local newspaper adverts were £4-500 for a semi display ad (2 or 3 columns by 10-12cm)

A subscription to totaljobs or CVLibrary will typically include a certain amount of cv database access plus a certain number of advert slots per month and they start at £500pcm for a single user. All those subscriptions add up and the time spent sifting through cv databases is not insubstantial either, all those costs have to be factored into the fee for the the times you actually fill the role - remembering if you are working against other agencies (as the company looking itself) the majority of roles you work on you receive £0 fee for in standard contingency recruitment.