Temp-to-Perm Fees

Posted in : HR Updates on 10 April 2013
Helen O'Brien
Personnel and Training Services
Issues covered:

Heln O'Brien writes:

Since the Agency Workers Regulations (Northern Ireland) 2011, took full effect in December 2011, businesses have sought to decrease costs. 

Complying with the requirement that agency workers receive the same rates of remuneration and holiday entitlement as comparable employees after 12 weeks usually means that agency workers cost more — employment agencies will now charge a fee on top of the worker’s pay as they are prevented by law from charging the worker any fee.

This means that, if the assignment is going to last longer than 12 weeks, the hirer either has to comply with the regulations and pay the agency premium, request alternative workers, or employ the workers.

The Temp-to-Perm Fee

However, where a hirer chooses to employ the workers who were previously employed by the agency, the agency will seek to charge a fee.

This is usually called a temp-to-perm fee, because the worker that worked for the hirer on a temporary basis shall be employed permanently by that hirer.
These temp-to-perm fees can be substantial — often up to 15% of the worker’s first year salary — and can be payable even where the worker has applied directly to the hirer, been sourced through another agency or had a short break from the assignment.

The circumstances in which temp-to-perm charges can be levied are regulated by the Conduct of Employment Agencies and Employment Businesses Regulations (Northern Ireland) 2005, though the level of the fee is not.

When Can't be Levied?

If the worker has been engaged on the assignment for six weeks or more, temp-to-perm fees cannot be charged where there has been a break of over eight weeks since the worker last worked on the assignment. If the worker has worked for fewer than six weeks on the assignment, the break must be for the remainder of that six-week period, together with a further eight weeks.

In addition to this requirement, the contract between the agency and the hirer must provide that, as an alternative to the temp-to-perm fee, the hirer can instead continue the hire for the same length of time on the same or better terms. If this option is missing, then no temp-to-perm fee can be charged.

Finder Fees Generally Apply

It is important to note that the regulations preventing the charge of a temp-to-perm fee do not apply to other finder fees generally payable to a recruitment agency that has sourced a new employee, which again can be high, and can be chargeable where you employ someone months after their details have been sent through by a recruitment agency.

Mind the Terms and Conditions

This is also probably an opportune occasion to remind how easy it can be to become bound by terms and conditions without being aware of them.

Terms may be displayed on an agency’s website, or linked to in an e-mail signature. It is quite common for agencies to send unsolicited CVs to an address in a job advertisement, together with their terms or a statement that their terms and conditions are available on request or on their website. Unless these terms are rejected, it could well apply to any subsequent recruitment of anyone provided by the agency, or, in the case of an exclusive agency agreement, any engagement at all whether introduced by that agency or not.

This article is correct at 04/11/2015

The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.

Helen O'Brien
Personnel and Training Services

The main content of this article was provided by Helen O'Brien. Contact telephone number is 028 2564 4110 or email HelenOB@pts-ni.com

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