Recruitment agencies, also known as staffing agencies or employment agencies, are an integral part of the UK job market.
They provide a valuable service to job seekers and employers by matching skilled candidates with suitable job vacancies.
But how do recruitment agencies make money in the UK? In this blog post, we’ll explore how recruitment agencies generate revenue.
The primary way recruitment agencies in the UK make money is through placement fees.
When an employer uses a recruitment agency to fill a job vacancy, the agency charges the employer a fee for finding a suitable candidate.
The fee is usually a percentage of the candidate’s first-year salary, typically around 15% to 25%.
For example, if a candidate is offered a job with a salary of £30,000 per year, the recruitment agency would charge the employer a placement fee of £4,500 to £7,500.
The fee can vary depending on the type of position, seniority, and complexity of the role.
Temporary and Contract Staffing
Recruitment agencies in the UK also generate revenue through temporary and contract staffing.
In this case, the agency acts as the employer and hires temporary or contract staff to work for their clients.
The agency charges their clients a fee for the temporary or contract staff’s services, which includes the employee’s salary, the employer’s National Insurance contributions, and any other costs associated with employment.
The fee charged by the recruitment agency to their clients is usually based on the hourly rate paid to the temporary or contract worker.
The agency typically adds a margin to the hourly rate to cover costs and generate a profit.
In some cases, employers may require a recruitment agency to work exclusively on a particular job vacancy, in which case the agency may charge a retainer fee.
A retainer fee is a non-refundable fee paid by the employer to the recruitment agency to secure their services for a specific period.
The retainer fee is usually a placement fee percentage and can range from 5% to 10%.
The employer pays the retainer fee upfront, and the recruitment agency agrees to dedicate resources to finding a suitable candidate.
Candidate Attraction and Selection Services
UK recruitment agencies also offer candidate attraction and selection services to their clients.
These services include advertising job vacancies, screening resumes, conducting interviews, and checking references.
The agency charges its clients a fee for these services, usually a flat or a percentage of the placement fee.
UK recruitment agencies may offer additional services to their clients, such as background checks, psychometric testing, and candidate training.
These services are charged separately and can generate additional revenue for the agency.
Recruitment agencies play a vital role in the UK job market by connecting talented candidates with suitable job vacancies.
They generate revenue through placement fees, temporary and contract staffing, retainer fees, candidate attraction and selection services, and additional services.
By providing a valuable service to job seekers and employers, recruitment agencies remain an essential part of the UK job market.