Recruitment Agency Cut / Margin – Do They Have to Tell You What it is?

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Recruitment Agency Cut
Recruitment Agency Cut of contractor's rate

The Recruitment Agency Cut They Take

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A reader asked abut the recruitment agency cut and whether they have to reveal what they are taking from contractors.

Some agencies are upfront about it and some say that this is commercially confidential.

That’s normally because they are taking more than they would like you to know.

Question about Recruitment Agency Cut

Hi Gerry,

I’m not sure if I am contacting the right person but if you are unable to help me maybe you will be able to point me in the right direction.

I am currently towards the end of my contract.

The client wants to renew.

Contract Rate Rise at renewal time
Contract Rate Rise at renewal time

However I would like my rate increased.

The agency cut, I believe, is quite large but what I would like to know is do they legally have to tell me what their cut is?

I have asked them three times to reveal the recruitment agency cut via email but they answer other questions but not that one!

Do you have any advice?

No Obligation to Reveal Agency Margin

Hi F…..

The agency has no legal obligation to tell you what they are getting for you. That is purely a deal and contract between the client and the agency. Although the fact they are hiding it would suggest that it is an agency cut they are embarrassed about.

There are ways around this. If the agency won’t tell you then you can ask the client if you feel you can.

You could negotiate directly with the client asking for a small raise from them.

Too many people leave it to the agency.

During the course of your negotiation with the client you could enquire as to the agency cut.

Rise Out of Both Client and Agency

I once got a rise from both the client and the agency. I told the boss that I wanted a 3% rise.

So, I found out what they were paying the agency. I then asked the agency for 10% altogether.

I told my client to ignore anything that the agency told him about our negotiations as I would be renewing my contract.

Getting a Good Contract Rate from an agency
Getting a Good Contract Rate from an agency on a contract

They Got Back To Me

The agency got back to me and told me that the company wouldn’t agree to a 10% rise.

I told the agency that this was unacceptable and that I didn’t want to renew my contract.

That got them panicking at the likely loss of income for them and they contacted the client again.

The client came to me afterwards and asked if everything was OK because the agency said I was leaving.

“Ignore that” I said. “I’m happy with the 3% from you. I want to take more of the agency cut from the agency”.

Got a Better Offer

The agency came back and offered 8% which I accepted.

The only stipulation was that I had to sign for a 6 month contract instead of a 3 month one as the client said he didn’t want to have to go through that again every 3 months.

So, there are other ways to find out the agency cut other than by asking them.

Another way I’ve found out the recruitment agency cut is by asking the boss’s secretary what the agency cut is. She usually knows (and is usually dying to tell you even if she says she can’t).

“You’ll have to promise you won’t tell anybody I told you” she’s likely to say.

Of course you won’t tell anyone. You have all the information you need now to conclude the deal successfully.

See also Recruitment Agency margins – How to Find Them Out.

To be forewarned on their negotiating tactics see also Taking Contractors Money – How to Take More of It – Agent’s Confession.

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