How Much Does a Recruitment Agency Cost in the UK?

If you are thinking about using a recruitment agency, the first question is usually the simplest one: how much will it cost? The short answer is that most UK agencies charge between 15% and 25% of the new employee's first-year basic salary for a permanent hire, and you normally only pay once that person starts. But the fee model, the type of role and the agency's terms all affect the final figure, so it is worth understanding how the numbers work before you commit.

This guide explains the main ways UK recruitment agencies charge, what drives the price up or down, and the questions to ask so you can compare agencies on more than the headline percentage.

The Short Answer: 15–25% of First-Year Salary

For permanent recruitment, the most common arrangement is a percentage of the successful candidate's first-year basic salary. As a rough guide:

• Entry-level and high-volume roles: usually towards the lower end of the range, sometimes below 15% where an employer is hiring in volume
• Mid-level professional and technical roles: commonly around 17.5–20%
• Specialist, senior or hard-to-fill roles: often 20–25%, and sometimes higher for executive search

To put that into numbers, a 20% fee on a role paying £35,000 a year would be £7,000. On a £60,000 senior engineering or management position, the same percentage would be £12,000. Because the fee scales with salary, the percentage matters more as roles become more senior.

Contingency Recruitment

Contingency recruitment is the model most employers are familiar with. The agency searches for candidates, presents a shortlist and supports the interview process, but you only pay if you hire someone they introduced and that person starts work. If the role is filled another way, or not at all, you owe nothing.

Contingency works well for most permanent roles because the agency carries the risk of the search. The trade-off is that you may be one of several clients competing for a recruiter's time, and if you brief multiple agencies on the same role, each one is working on a speculative basis.

Retained Search

For senior, confidential or business-critical appointments, many employers choose a retained search. Instead of paying only on success, the fee is split into stages, typically paid when the search begins, when a shortlist is presented and when the candidate is appointed.

Retained fees are usually at the higher end of the range, but in return you get a dedicated, exclusive search. The recruiter commits significant time to mapping the market and approaching people who are not actively looking, which is often the only way to reach the strongest candidates for leadership and niche technical roles.

Temporary and Contract Staff

Temporary and contract recruitment is charged differently. Rather than a one-off placement fee, you pay an hourly or daily charge rate for each hour or day the worker actually works. That charge rate covers:

• The worker's pay
• Employment costs the agency carries, such as employer's National Insurance, holiday pay and, where applicable, pension contributions
• The agency's margin for finding, vetting, paying and managing the worker

When comparing temp agencies, look at the full charge rate rather than the pay rate alone. Two agencies offering workers the same hourly pay can charge you very different amounts once on-costs and margin are added.

Temp-to-Perm Transfer Fees

If you want to take on a temporary worker permanently, the agency may charge a transfer fee. This is allowed, but it is regulated. Under the Conduct of Employment Agencies and Employment Businesses Regulations 2003, an agency can only enforce a transfer fee if its terms also give you the option of an extended period of hire instead, after which the worker can transfer without a fee. Transfer fees can also only be charged within a limited window, broadly 14 weeks from the start of the assignment or 8 weeks after it ends, whichever is later.

If there is a chance you will want to keep a temp permanently, check the transfer terms at the outset rather than when you are ready to make an offer.

What Affects the Fee?

Two agencies can quote quite different percentages for what looks like the same job. The main factors are:

• Seniority and salary: higher-paid roles take longer to fill and involve more headhunting
• Skill scarcity: roles in short supply, such as experienced engineers, surveyors or specialist technicians, require far more search effort
• Exclusivity: agencies can often offer a better rate when they are the only agency briefed on a role, because their chance of success is higher
• Volume: ongoing or multiple hires usually attract a lower percentage than a one-off placement
• Location: remote or hard-to-reach locations can narrow the candidate pool
• Guarantee terms: a longer or more generous rebate period is worth something, even if the headline fee is slightly higher

Rebates and Replacement Guarantees

A good agency stands behind its placements. Most offer either a free replacement or a sliding-scale refund if a permanent hire leaves within an agreed period, commonly somewhere between 8 and 12 weeks. Check how the rebate is calculated, how quickly you need to notify the agency, and whether it applies if the employee is dismissed as well as if they resign.

Is a Recruitment Agency Worth the Cost?

The fee is only half of the comparison. Recruiting directly also has costs, even if they do not arrive as a single invoice:

• Job board advertising and LinkedIn recruiter licences
• Management time spent writing adverts, screening CVs and holding first interviews
• Lost productivity and overtime while the role sits empty
• The cost of a poor hire, including repeating the whole process a few months later

A specialist agency earns its fee by reaching candidates who never see your advert, by screening properly so you only interview people who can do the job, and by filling the role faster. For hard-to-fill or business-critical positions, that is often the difference between hiring the right person this month and still searching next quarter. Read more about why a specialist agency makes a difference and our guide to hiring the best talent.

Questions to Ask Before You Sign

Before agreeing terms with any agency, make sure you know the answers to these questions:

• What is the fee percentage, and is it calculated on basic salary or the full package?
• When is the invoice raised, and what are the payment terms?
• What rebate or replacement guarantee applies, and for how long?
• Is the agreement exclusive, and does that change the fee?
• How will you find candidates for this role beyond advertising it?
• For temps: what is the full charge rate, and what are the transfer terms?

If an agency cannot answer these clearly, that tells you something about how they will manage your vacancy.

How H2O Recruitment Works with Employers

At H2O Recruitment Services, we offer both contingency and retained search with flexible fee structures, and every quote is tailored to the role you need to fill. Our permanent placements come with a replacement guarantee, and our terms are set out clearly from the start. For job seekers, our service is always free.

We specialise in engineering, automotive, property, logistics and commercial recruitment across the UK. To find out what your next hire would cost, get in touch with our team for a no-obligation conversation, or read more about how our recruitment process works.