Choosing a recruiter
What are employment agencies and how do they work? (UK guide) ?
An employment agency is a business that helps employers find staff. In the UK, they generally work in one of two ways: temporary (supplying workers paid by the agency) or permanent (finding candidates you employ directly). For permanent roles, most charge a percentage of the first-year salary — typically 15–25% — payable only when someone starts. A smaller number charge a fixed fee agreed upfront. Agencies source candidates through job boards, their own databases, and direct approaches, then screen and shortlist them. The key difference between agencies is whether they work on a contingent (no-win, no-fee) or retained/engaged basis, which affects the depth of search and the commitment you make.
What an employment agency actually does
An employment agency sits between you and the labour market. Its job is to find people you cannot reach yourself — or to save you the time it takes to sift through applications.
For permanent roles, a typical agency will:
- Take a job brief from you
- Write and place adverts on job boards
- Search its own database of candidates
- Headhunt people who are not actively looking
- Screen applicants by phone or video
- Send you a shortlist of interviewed candidates
You interview the shortlisted candidates and make the final choice. The agency does not make the hiring decision.
For temporary roles, the agency employs the worker and supplies them to you. You pay an hourly or daily rate to the agency, which covers the worker’s pay, National Insurance, holiday entitlement, and the agency’s margin.
The two main charging models
Percentage of salary (contingency)
This is the most common model in the UK. The agency charges a percentage of the candidate’s agreed first-year gross salary, and you pay only when the person starts.
| Salary band | Typical market fee (% of salary) | Approximate cost |
|---|---|---|
| Up to £30,000 | 15–20% | £4,500–£6,000 |
| £30,000–£59,999 | 20–25% | £6,000–£15,000 |
| £60,000–£99,999 | 22–28% | £13,200–£28,000 |
| £100,000+ | 25–30%+ | £25,000+ |
These figures are a market illustration, not our prices. Several agencies will often work the same role on this basis, and you pay nothing unless one of them fills it. The risk sits with the agency, which is why fees are higher.
Fixed fee (engaged search)
A smaller number of agencies charge a set price agreed before the search begins. Our service, Premium Hire, works this way:
| Role salary | Fee (ex-VAT) |
|---|---|
| Up to £30,000 | £1,500 +VAT |
| £30,000–£44,999 | £2,000 +VAT |
| £45,000–£59,999 | £3,000 +VAT |
| £60,000–£79,999 | £4,000 +VAT |
The fee is the same whether the role is hard to fill or straightforward. You know the cost before you commit. The trade-off is that you pay for the work done, not just for a successful outcome, so the agency is engaged to run a thorough search rather than race other agencies to a CV.
Temporary vs permanent agencies
Some agencies specialise in one or the other. A temporary staffing agency (sometimes called a recruitment business under the Conduct Regulations) handles payroll, compliance, and often provides quick cover for sickness, seasonal peaks, or project work. A permanent recruitment agency focuses on filling roles that go onto your own payroll.
It is worth asking any agency you speak to which model they primarily operate. A firm that does mostly temporary placements may not have the network or habits needed for a thorough permanent search, and vice versa.
How to choose an employment agency
- Ask how they charge. If the answer is vague, walk away. You should know the exact percentage or fixed fee, and when it falls due.
- Ask what happens if the hire leaves early. A contingency agency will typically offer a rebate period — a sliding scale of credit or replacement over a set number of weeks. Our optional Replacement Cover, bought before the start date, provides one replacement search at no further fee if the hire leaves for any reason within 12 months.
- Ask who will do the work. Some agencies sign you with a senior consultant, then hand the role to a junior researcher. Ask to speak to the person who will actually screen candidates.
- Check their sector knowledge. An agency that fills roles across 18 sectors — as we do — should be able to show you real data. We publish every role we fill, including time-to-fill and candidate-funnel numbers, on our recruitment data page.
- Read the terms. Some contracts include a minimum period before you can hire a candidate directly, or a fee if you introduce a candidate the agency already had on file. Good agencies explain these clauses plainly.
What an employment agency cannot do
An agency cannot guarantee a hire. Anyone who does is either stretching the truth or will put forward anyone with a pulse to collect a fee. The labour market is unpredictable, and a good agency will tell you honestly if your salary, location, or requirements make a role hard to fill — before you spend money.
We run a five-point review of every role before we agree to work it: market standing, salary and package, competitor analysis, online presence, and your current adverts and process. If something is off, we say so. That conversation is more valuable than a promise of a shortlist in 48 hours.
Employment agencies and the law
UK employment agencies must comply with the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003. These set rules on charging (agencies cannot charge workers for finding them work), record-keeping, and the information they must give to both employers and candidates.
If an agency supplies temporary workers, it is responsible for checking their right to work in the UK. For permanent placements, the employer usually takes on that responsibility once the person starts, though a good agency will verify documents at the screening stage.
FAQs
Do I have to use an employment agency to hire?
No. You can advertise directly on job boards, use LinkedIn, or rely on referrals. Many small businesses hire successfully without an agency. An agency is worth the cost when you lack the time to screen applicants, need to reach people who are not actively job-hunting, or have a role that has proven hard to fill on your own. Our job advertising packages start at £399 +VAT if you want to run your own campaign with our help.
What is the difference between an employment agency and a headhunter?
A headhunter typically works on a retained basis for senior or specialist roles, approaching a small number of identified individuals directly. An employment agency casts a wider net, using job adverts and a database alongside direct approaches. In practice, the line has blurred: many agencies now do headhunting as part of a permanent search. We cover the distinction in more detail on our page about headhunting vs recruitment agencies.
How long does it take an employment agency to fill a role?
It varies enormously by sector, salary, and location. Across the 46 roles we have published in full, the median time to fill was 42 days, with the middle half falling between 29 and 68 days. The fastest was 14 days; the slowest was 169. A realistic agency will give you a range, not a single number.
Are employment agency fees subject to VAT?
Yes. All UK recruitment agency fees are subject to VAT at the standard rate. Any fee you are quoted should be clearly stated as either including or excluding VAT. We always quote ex-VAT with +VAT stated alongside.
Sources
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