Introduction to this document

Election to pay transfer fee for agency worker

An agency supplying you with a temporary worker can normally charge you a transfer fee where you then offer that worker permanent direct employment with you. If you agree to pay that fee, use our letter to confirm your position.

Transfer fee

When entering into an agreement with a temporary agency (called an “employment business”) for the supply of temporary workers, do carefully read their terms and conditions, particularly if there’s a possibility you might later want to offer a suitable temporary worker permanent direct employment with you. In this scenario, the employment business can generally charge you a transfer fee, often called a “temp-to-perm” fee. This fee is normally expressed as a percentage of the worker’s first year’s salary and it’s not unusual to see fees that are as much as 25% to 35% of salary.

Fee negotiation

There’s no statutory maximum limit on the transfer fee, so each employment business sets their own level. You can look to negotiate it down, but your bargaining position will be much stronger if you do this at the outset when the terms and conditions are first provided to you, and before any temporary workers are supplied, rather than later on when you want to offer one of them direct employment.

Offer of employment

Where you do offer a temporary worker a permanent role with you, and they confirm they would like to accept your offer, use our Election to Pay Transfer Fee for Agency Worker to notify the employment business of your intention to pay the transfer fee in respect of that worker. Our letter confirms that you’ve offered the temporary worker a permanent position and what their starting salary is to be. It then refers to the transfer fee clause in the contract that you’ve entered into with them and sets out what amount you calculate that fee will be. Finally, it confirms that, assuming your offer of employment is formally accepted by the worker and they start work for you, you’ll pay the transfer fee within a stipulated number of days after the commencement of their employment. Do first check what the terms and conditions say about when the fee is due to be paid. The advantage in paying the transfer fee is that you can employ the temporary worker as a permanent employee quickly.

Other options

Any term in a contract between the employment business and you that relates to the imposition of transfer fees will be unenforceable unless the contract provides that, instead of paying the transfer fee, you can choose to continue hiring the temporary worker for a period of time specified in the contract (known as an “extended hire period”), at the end of which they can transfer to your direct employment. You can also avoid paying a transfer fee once a certain time period (known as a “quarantine period”) has elapsed after the end of a worker’s assignment with you.