Is This True About Contracting...?

dranzer01

My flatmate who has been contracting for 10+ years told me:

a role is advertised @ 500 day rate (when the hiring company actually told the agency they are looking to pay out 800 day rate)

The agency will then downplay the day rate and say some !!!! n ball and it probably might go down to 350/400 day rate -

He then told me, they do this, and then they skim the 100-250 from the ACTUAL agreed day rate the company said... and that is what the agency collects every single day from you, for the duration you are in that contract...


Is this true?


I was never aware of this. It doesnt say it in any of my contracting contracts ive seen... Why cant agencies be open and transparent, stating what they will be collecting etc?


If this is true and if this is the case, how would you combat this?

martinsurrey

dranzer01 wrote: »

My flatmate who has been contracting for 10+ years told me:

a role is advertised @ 500 day rate (when the hiring company actually told the agency they are looking to pay out 800 day rate)

The agency will then downplay the day rate and say some !!!! n ball and it probably might go down to 350/400 day rate -

He then told me, they do this, and then they skim the 100-250 from the ACTUAL agreed day rate the company said... and that is what the agency collects every single day from you, for the duration you are in that contract...


Is this true?


I was never aware of this. It doesnt say it in any of my contracting contracts ive seen... Why cant agencies be open and transparent, stating what they will be collecting etc?


If this is true and if this is the case, how would you combat this?

Why does it need sorting out?

If they can find someone to do the job for X and the company is willing to pay them Y to find someone to do the job, why shouldn't they get (Y-X)?

Its like asking Tesco to put how much each product cost them to buy on the shelves so you can see how much money they are making on each tin of beans!

tacpot12

Agencies are in business and have costs; anything they can do to maximise their income helps reduce the risk of the agency failing. I don't ever begrudge a business their profit.

You won't find transparency as it is not in the agencies' interests.

The answer is to know the rate you should be paid for your role and negotiate hard for that rate.

agrinnall

There are two ways for you to combat it:

1) Refuse to accept anything below the advertised rate - although you then run the risk of somebody else undercutting you.

2) If you can't beat them, join them - set yourself up as an agent and either be happy with the £300 between what the client pays and the contractor is paid, or be unscrupulous and also rake off another £100/£150 from the contractor's end of the deal.

Ozzuk

Its common, but not really your problem. A lot of larger companies (ours included) will only use agencies because they do all the legwork - for instance I only get 2-3 people to interview as they have already gone through all the CVs for me, so we pay a premium.

If you like that, you'll love this, one of my ex partners secured a job via an agency, paying around 30k, the agency got a first year fee upfront of over 15k just for finding her. Thinking back, it may even have been closer to her first year basic.

Also, a lot of the jobs you see advertised (at least in IT fields) aren't real, they are created by agencies to capture CVs and build a skillset list.

You can try promoting yourself, linkedin for instance can be a good route, but often even if you apply direct you'll be told to go via an agency.

paddyrg

Some employers will go absolutely insane and fire an agency for doing this. If the agency is a member of REC they have signed a code of conduct for transparency and decency - grass them up if you're concerned.

dranzer01

paddyrg wrote: »

Some employers will go absolutely insane and fire an agency for doing this. If the agency is a member of REC they have signed a code of conduct for transparency and decency - grass them up if you're concerned.

haha, this is exactly what my flatmate was saying to me... He told me his company 'we arent paying you £800 a day to... blah blah blah...' , then he was like... '£800 a day...? who the hell is getting £800 a day...?'

And thats where the can of worms opened up.....

trailingspouse

They're the middle persons, and as such they take a cut. Twas ever thus.

We use agencies in both directions, as it were - both to secure work and to find sub-contractors.

We tell the agency how much we want per day (yes, I understand we're in a nice position being able to do that) - as long as we get that amount, we don't really care how much the agency charges the client. We don't discuss remuneration with the client. Agencies are much better placed to find contracts than we would be on our own - many jobs aren't advertised any other way.

And when we want sub-contractors, we tell the agency how much we're looking to pay per day - we don't concern ourselves with how much the agency pays the contractor. At the level we're talking about, we assume that our contractors are perfectly capable of negotiating on their own behalf. If I call an agency in the morning, I will have 3 CVs by the afternoon - at no cost or effort to me.

If you are shocked that agencies take a cut - how else do you think they make their money? And actually, they're not taking a cut - you agree to work for £x, and that's what you get.

ReadingTim

Jeez...talk about living a sheltered life....

To add to what those living in the real world have said, the end employer knows the agency takes a cut (and may also be paying the employers NIC, pension etc) but also will have a fairly good idea of the level of skills, experience etc a worker should have for the rate they're paying. Similarly, people at every level of skill, experience, seniority
etc should have a good of what the going rate for their level in whatever industry they're in.

If an employer pays manager pay, they expect manager level people, so if the agency takes too big a cut and can only 'afford' to send along a trainee or newly qualified person, the employer isn't going to be too happy, and the agency gets the boot.

If you don't like it, don't contract via an agency; or set yourself up as a limited company and contract direct. Or, given IR35, just go on the payroll as a permanent employee.

motorguy

dranzer01 wrote: »

My flatmate who has been contracting for 10+ years told me:

a role is advertised @ 500 day rate (when the hiring company actually told the agency they are looking to pay out 800 day rate)

The agency will then downplay the day rate and say some !!!! n ball and it probably might go down to 350/400 day rate -

He then told me, they do this, and then they skim the 100-250 from the ACTUAL agreed day rate the company said... and that is what the agency collects every single day from you, for the duration you are in that contract...


Is this true?


I was never aware of this. It doesnt say it in any of my contracting contracts ive seen... Why cant agencies be open and transparent, stating what they will be collecting etc?


If this is true and if this is the case, how would you combat this?

I'm an IT contractor and with REED. They take around 15% ish as a margin per day. They've been open with me about that and i know they're telling the truth as i see the figures at the other end as i work on the project budgeting.

I've no issues with that. It is what it is.

motorguy

ReadingTim wrote: »

If you don't like it, don't contract via an agency; or set yourself up as a limited company and contract direct. Or, given IR35, just go on the payroll as a permanent employee.

Most organisations only operate through agencies so its difficult to circumvent for a lot of contracts.

Inside IR35 as you know brings its own problems.