Introduction and transfer fees explained
Agencies invest a lot of time, money and resources into ensuring that they can provide you with temporary staff at any given time when you find yourself in need of some emergency cover, or to support your internal recruitment and selection process.
As such, there are fees that come with sourcing these candidates. That’s why this month we wanted to share with you the two different types of fees and what they’re for.
What are introduction fees?
An introduction fee is something that an agency will charge a school or nursery to find a member of staff, who is going to be taken onto a direct contract of employment with the client.
Remember, this isn’t a charge that is paid straight away. The fee is usually only charged when a suitable candidate has been found and you have decided to offer them a contract of employment.
As a result of this, the background work that an agency does, including sourcing the candidate and interviewing them, is free. You are under no obligation to offer a job to the candidate your Agency finds.
What happens if the candidate leaves?
There is usually a rebate in place for if the candidate you’ve employed through the agency leaves within a certain time period. This should be set out in your contract, but if you’re unsure, then it’s always best to check.
The contract of employment you offer can be:
- A fixed term contract for a specific period of time, or
- A permanent contract
If the contract is a permanent placement and there is no temporary booking, your agency will do all the job role-advertising, candidate pre-screening and interviewing.
They will then submit CVs for your consideration. If you’re interested in meeting any of the pre-selected, vetted candidates for interview, your Agency can also arrange this for you, saving you both time and money.
What else do you need to know?
- Your agency should endeavour to meet you, visit your site and gain a good understanding of what type of candidate would suit your organisation.
- You will be invoiced for the introduction fee, which is normally a percentage of the candidate’s annual salary or fixed fee. You should ask your agency to confirm the fee before you instruct them to work on your behalf.
- The full introduction process should be detailed in an agency’s Terms of Business and should be explained to you prior to you instructing an agency to work on your behalf.
What are transfer fees?
A transfer fee is a charged to your organisation when a temporary worker is converted onto a direct contract of employment.
This transfer fee is one of the questions an agency hears most, and we would like to assure you that it is all completely legal, ethical and all recruitment agencies will have this in place.
If your Agency has done their job well, the temporary worker they send you will fit seamlessly into your organisation, they will work hard and be an ideal candidate for you to employ directly (irrespective of whether you need another permanent member of staff).
Why are there transfer fees?
The agency’s transfer fees are in place to ensure their business can continue to be successful when temporary workers are offered direct positions within client schools and nurseries.
Very often, organisations will use an agency to source temporary members of staff to cover short-term absences. Alternatively, if you’re recruiting for permanent staff and need long-term cover to support you whilst you’re going through the recruitment process.
If you then employ the temporary member of staff, that is an immediate loss to the recruitment agency, not only the loss of the initial investment made making the candidates available to you, to begin with, but also the loss of potential future bookings they could have booked that candidate into.
The benefit of transfer fees
It is often the most common way our clients find suitable candidates because it allows you as a client to almost ‘try before you buy’, giving both yourself and the candidate piece of mind in the recruitment and employment decision.
What else do you need to know?
Legally there is a time frame in which an agency can charge a transfer fee after a temporary booking has been made.
This is called a Relevant Period and that; along with the transfer process, should be detailed in your agency’s Terms of Business and explained to you when you start to work with the agency.
How to avoid paying transfer fees
If you are using an agency to book temporary workers and you decide that you do like a particular candidate or you know that if the opportunity came up you would like to offer the candidate a contract of employment directly with your organisation, ask your agency to set up a Period of Extended Hire.
What is a Period of Extended Hire?
A Period of Extended Hire is where you agree to book a candidate for a fixed period of time, after which the transfer fee is waivered.
This period can usually be negotiated with your agency and can range from 12-24 weeks, and it is usually full time or full-time equivalent.
What else do you need to know?
Agreeing to a Period of Extended Hire doesn’t oblige you to offer a direct Contract of Employment to the temporary worker.
It simply allows the recruitment agency to plan in advance and to recover some of its investment in recruiting the candidate, with the view that they may only ever be able to book the candidate for that agreed period of hire with your organisation before the candidate then transfers onto a direct contract of employment with you.
We would recommend that you discuss this with your agency as it will avoid any transfer fees for your organisation in the future, whilst still allowing you the flexibility to use your agency for temporary staff and try them out before you take them onto a direct contract.
How to get discounts and special rates with your Recruitment Agency
There’s never harm in asking! Speak to your agency to find out how you can get a discount or special offer. They should be prepared to offer this if you are prepared to give them some loyalty in return, especially if you’re a regular customer.
If a special rate or discount is offered, a Preferred Supplier Agreement or Sole Supplier Agreement can be put in place. This will detail the terms of regular discounts.
Why do agencies charge these fees?
As well as the ongoing costs of marketing, advertising, pre-screening and interviewing candidates, a recruitment agency often has its own internal staff to pay, office and website running costs, DBS expenses and HR and Accounting costs.
Some agencies will even be registered with regulatory bodies such as the Recruitment and Employment Confederation, who also charge registration and auditing fees.
A good recruitment agency will be taking an interest in your recruitment budget to ensure it is operating reasonably and competitively within the marketplace.
However, they also want to ensure they can offer you value for money, ultimately saving you time and expense by taking much of the recruitment process and stress away whilst working closely with you.
A good relationship with your chosen recruitment agency is key, and if you already knew everything mentioned above, you probably already have this.
Whether you’re a client or a candidate, we hope that you’ve found this blog informative and insightful. Remember, if you do need any further information on anything you’ve read, please do get in touch with us.
Alternatively, you can come and join us on Twitter and Facebook. We’re always updating our community with advice, insights and information from the world of educational recruitment. We look forward to seeing you there.