How much do recruitment and staffing agencies charge? Fees, markups and the rules
The short answer
Agencies charge employers in three main ways. For a permanent hire, the fee is a percentage of the new employee’s salary or a fixed fee, usually paid only when the candidate is placed. For temporary and contract staff, the agency employs the worker and bills an hourly rate that covers their pay, payroll taxes, insurance, overheads and profit: in an American Staffing Association example from 2019, a $17 pay rate became a $25.76 bill rate, a 51.5% markup. If you hire a temporary worker permanently, a temp-to-perm fee may apply. There is no official standard rate. Fees are agreed by contract, and the latest public UK industry figures, for 2018/19, put the average margin at 14.7% on permanent placements and 17.3% on temporary work. Candidates rarely pay: UK law bans most fees to work-seekers, and New York and California regulate them.
Every rule links to the official text and every figure to its source, read on 2 October 2026.
Agency fees at a glance
A summary of what follows. Each row is explained below with its source.
| Fee | How it is worked out | Who sets it | Published reference point |
|---|---|---|---|
| Permanent placement | A percentage of the hire’s salary, or a fixed fee | Your contract with the agency | REC, 2018/19: average margin on permanent placements 14.7% |
| Temporary or contract staff | Hourly bill rate: pay plus employer costs, overheads and profit | Your contract with the agency | ASA example, 2019: 51.5% markup on a $17 pay rate |
| Temp-to-perm (UK) | A transfer fee, or an extended hire period instead | Contract, within the Conduct Regulations | Only if you hire within 8 weeks of the end or 14 weeks of the start, whichever is later |
| Temp-to-perm (Illinois day and temporary labor) | A placement fee capped by law | State law | At most 60 days of the agency’s daily commission, less days already worked |
| Fees to candidates (UK) | Not allowed for finding work, with narrow exceptions | Employment Agencies Act 1973 | Exceptions: entertainment, modeling and professional sport |
| Fees to candidates (New York) | Capped by job class; no registration fees or advance fees | State law | Professional and office jobs: up to 60% of the first full month’s pay |
The main ways agencies charge
How an agency charges depends on who employs the worker. When an agency introduces a candidate you hire directly, you pay a placement fee and the person joins your payroll. When an agency supplies a temporary or contract worker, the agency (or its payroll provider) usually employs and pays them, and bills you for every hour or day worked.
Most permanent recruitment is contingency work: the UK government’s former Crown Commercial Service describes it as a non-exclusive service paid on placement. Retained search, also called executive search, involves closer engagement and a commitment to one firm, and is paid in agreed stages. Public framework documents show the same structures: permanent recruitment lots priced as a percentage of the worker’s salary, and executive search lots at a fixed rate.
| Model | How the fee works | When you pay | Agree in writing |
|---|---|---|---|
| Contingency (permanent) | A percentage of the hire’s salary, or a fixed fee | When the candidate is placed | The rate, what counts as salary, rebate or replacement terms, payment terms |
| Retained or executive search | A fee for the whole search, often fixed | In stages agreed at the start | The stages, what triggers each payment, exclusivity, what happens if the search stops |
| Temporary or contract staffing | An hourly or daily bill rate: the worker’s pay plus a markup | On regular invoices for time worked | Bill rates, overtime and holiday pay, notice, the temp-to-perm fee |
| Temp-to-perm (conversion) | A fee when you hire the worker directly; in the UK you can choose an extended hire period instead | When you hire the worker | How the fee falls as weeks are worked, and the extension terms |
Permanent placement fees: what the published figures say
A permanent fee is the agreed percentage multiplied by the salary your terms define. Check that definition first: whether “salary” means base pay only, or includes guaranteed bonus, commission, allowances or a sign-on payment, changes the fee as much as the percentage does.
No regulator publishes a standard rate, and the percentages quoted online often come from agency blogs rather than research. The most recent public industry figures we found are from the UK’s Recruitment and Employment Confederation, for the year to March 2019: an average margin of 14.7% on permanent placements and an average permanent placement value of £5,152. REC does not define “margin” in that release, so treat it as a rough benchmark, not the fee as a share of salary. Newer REC figures are for members only.
Public-sector frameworks set a maximum price for each supplier rather than one market rate. Under the former Crown Commercial Service permanent recruitment framework, each supplier’s tendered prices were “the maximum that they can charge”, and the rate cards were not published.
Rebates and free replacements
Check what your terms say happens if a new hire leaves early. Agencies commonly offer a partial refund on a sliding scale, or a free replacement search. One published example: on the executive search lots of the government framework, if the person placed left within six months, the buyer was due a rebate of 50% of the fixed fee. Agree the period, the refund for each month, and any conditions, such as paying the invoice on time, before you accept a candidate.
Temporary staffing: bill rates, markups and margins
For temporary and contract workers, you pay a bill rate for each hour or day. It has to cover the worker’s pay, the costs the law puts on the employer, the agency’s overheads and its profit. The American Staffing Association’s fact sheet breaks down an example built on 2019 national averages: a $17 hourly pay rate, marked up by 51.5%, gives a $25.76 bill rate, of which the agency keeps $0.85, or 3.3%, as net profit.
Markup and margin describe the same gap in different ways. Markup is the gap as a share of the pay rate: $8.76 on $17 is 51.5%. Gross margin is the gap as a share of the bill rate: $8.76 on $25.76 is about 34%. When you compare quotes, ask which one an agency means, and what its bill rate includes.
In the UK, the bill rate also has to cover employer National Insurance, holiday pay and, for eligible workers, pension contributions. NHS England’s agency price caps show how large that uplift can be: they were set at 55% above basic pay rates in 2016, covering holiday pay, employer National Insurance, a nominal pension contribution and “a modest agency fee”. NHS England says the caps should not be read as standard or default rates. The REC figures for 2018/19 put the average margin on temporary and contract recruitment at 17.3%.
| Part of the bill rate | Per hour | What it pays for |
|---|---|---|
| Pay rate | $17.00 | The worker’s wages (the 2019 national average used in the example) |
| FICA | $1.30 | Employer Social Security and Medicare taxes, 7.65% of pay |
| State unemployment tax (SUTA) | $0.68 | Varies by state |
| Workers’ compensation | $0.34 | Varies by type of work and state |
| Federal unemployment tax (FUTA) | $0.10 | After the maximum state credits |
| General and administrative costs | $5.49 | The agency’s own staff, rent, equipment, advertising and marketing |
| Net profit | $0.85 | 3.3% of the bill rate |
| Bill rate | $25.76 | A 51.5% markup on the pay rate |
Temp-to-perm (conversion) fees
In the UK, the Conduct of Employment Agencies and Employment Businesses Regulations 2003 limit transfer fees. An employment business can charge one only if its contract gives you the option to extend the worker’s assignment instead, you don’t take that option, and you hire the worker less than 8 weeks after their assignment ends, or less than 14 weeks after it started if that is later. If more than 42 days passed between assignments, the later one counts as the first. The extended assignment can’t be on worse terms than before, so the agency can’t raise its rates, and hirers can recover any fee charged against these rules. Similar conditions apply to temp-to-temp and temp-to-third-party fees, and to introduction fees.
Gov.uk gives this example: after a 4-week assignment, a hirer can pay the transfer fee, keep hiring the worker through the agency for the extra 6 weeks set out in the contract, or stop and wait 10 weeks before hiring them directly. Some framework contracts reduce the fee as time passes. On the NHS Workforce Alliance non-clinical staffing framework, the transfer fee is calculated on the supplier fee only: 11 weeks of it after one week worked, falling to 4 weeks of it after eight weeks or more.
In the US, conversion fees are mostly set by contract. The American Staffing Association argues that “reasonable, negotiated client conversion fees” stop agencies being used as a free placement service. Illinois caps them for day and temporary laborers: the fee can’t exceed the agency’s daily commission over 60 days, reduced for each day the worker has already worked for the agency in the previous 12 months. The cap doesn’t apply to skilled labor, and the law excludes professional and clerical work.
Can an agency charge candidates?
In the UK, generally not. Under the Employment Agencies Act 1973, an agency or employment business can’t charge a work-seeker a fee for finding them work, and doing so is a criminal offense. The main exceptions cover entertainment, modeling and professional sport, where a fee can come out of the worker’s earnings, and only if the agency is not also charging the hirer. Agencies can sell other services, such as CV writing, training or transport, but must give written details of the fee first, must let the work-seeker cancel, and can’t make buying them a condition of finding someone work.
In the US, the rules are set by states and usually depend on whether the job seeker pays. California’s employment agency rules cover agencies paid, directly or indirectly, by job seekers: they need a $3,000 surety bond, must give job seekers a fee schedule showing each fee as a share of projected annual and first-month earnings, can’t take a registration fee, and can charge at most 1/90 of the permanent fee for each day of temporary work. New York bans registration fees and advance fees, and caps job-seeker fees for professional, office and executive jobs at 60% of the first full month’s pay, or less for low-paid jobs. Where the job seeker pays nothing, the employer’s fee is set by agreement. New York also bars employers from making an employee repay the agency fee.
| Rule | UK | California | New York |
|---|---|---|---|
| Fee for finding work | Banned, with narrow exceptions | Allowed, within the agency’s posted fee schedule | Allowed, within legal ceilings for each job class |
| Registration fee | Banned: no fee for finding or trying to find work | Banned | Banned |
| Ceiling | – | For temporary work, 1/90 of the permanent fee per day | Professional and office jobs: 25% to 60% of the first full month’s pay |
| Fee to the employer | Set by contract; transfer fees are limited | Not set by these rules | Set by agreement if the candidate pays nothing |
How to compare agency terms
Two agencies quoting the same percentage can cost very different amounts. Compare the whole set of terms, not the headline rate. Agency owners can use the same list to write their own terms of business.
- What the fee percentage applies to: base salary only, or bonus, commission and allowances as well.
- When the fee is due, and the payment terms on the invoice.
- The rebate or replacement period, the refund for each month, and the conditions attached.
- Exclusivity: whether you can use other agencies on the same role, and for how long.
- For temporary staff: the bill rate, what it includes, overtime and holiday pay, and notice to end an assignment.
- The temp-to-perm fee, how it falls as weeks are worked and, in the UK, the extended hire option.
- How long an introduction lasts: whether a candidate you hire months later, for a different role, still triggers a fee.
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Agency fees: frequently asked questions
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For a permanent hire, a percentage of the new employee’s salary or a fixed fee, usually paid when the candidate is placed. For temporary staff, an hourly bill rate made up of the worker’s pay plus a markup. Fees are set by contract and no regulator publishes a standard rate. The latest public UK industry figures, for 2018/19, put the average margin at 14.7% on permanent placements and 17.3% on temporary and contract work.
The bill rate is the worker’s pay rate plus a markup that covers employer taxes, insurance, overheads and profit. In the American Staffing Association’s 2019 example, a $17 pay rate was marked up by 51.5% to a $25.76 bill rate, leaving the agency $0.85 an hour, or 3.3%, as net profit.
A fee you pay an agency when you hire one of its temporary workers directly. In the UK, it can only be charged if the contract offered you an extended hire period instead, and you hire the worker within 8 weeks of the assignment ending or 14 weeks of it starting, whichever is later. In the US it is mostly set by contract; Illinois caps it for day and temporary laborers.
Rarely. In the UK, agencies can’t charge work-seekers for finding them work, except in entertainment, modeling and professional sport. In the US, states such as New York and California regulate fees charged to job seekers, including bans on registration fees.
Only if your terms say so. Many agency terms include a rebate on a sliding scale or a free replacement if the hire leaves within an agreed period. On the executive search lots of a UK government framework, for example, the buyer was due a 50% rebate if the person left within six months.
Markup is the gap between bill rate and pay rate as a share of pay; margin is the same gap as a share of the bill rate. In the American Staffing Association’s example, $8.76 on a $17 pay rate is a 51.5% markup, and about a 34% gross margin on the $25.76 bill rate.
Not in New York: the law bars employers from requiring, requesting or knowingly permitting an employee to reimburse an agency fee. Elsewhere, check the rules where you hire.
About this guide
This guide is general information, not legal or financial advice. Industry figures are from the dates shown and are not current market rates; fee rules change, so check the official sources and take advice before you agree terms. Beatview publishes this guide and sells screening software to recruitment agencies. Spotted something out of date? Tell us.