How Much Do Recruitment Agencies Charge for Temporary Staff in the UK? (2026)

A UK agency's charge rate has three layers: the worker's pay, the employment costs the agency must pay by law on top of it, and the agency's margin. For a temp aged 21 or over on the National Living Wage of £12.71 an hour, the legal costs alone take the price to about £16.36 an hour for a full-time 40-hour week — before the agency earns anything. Everything above that is the agency's margin, which UK law leaves to negotiation.

This guide breaks down each layer using 2026/27 rates from GOV.UK, HMRC and The Pensions Regulator, works through an example, explains why costs change after 12 weeks, and sets out when an agency can — and cannot — charge a fee if you take a temp on permanently.

The three parts of an agency charge rate

• Pay rate — what the worker receives for each hour. It can never be below the National Minimum Wage for the worker's age, and after 12 weeks it may have to match what your own staff are paid.
• Statutory on-costs — when the agency employs the temp, it pays holiday pay, employer National Insurance and pension contributions on top of the pay rate. These are the same costs you would pay for a direct employee.
• Margin — the agency's income. It covers recruitment and screening, right-to-work checks, payroll, insurance, replacement cover and account management, and the agency's profit.

The charge rate is the single hourly figure you are invoiced for each hour worked. Two quotes with the same charge rate can hide very different pay rates, so it is worth asking for the layers separately.

The legal costs on top of pay in 2026/27

Rolled-up holiday pay is only lawful for irregular-hours and part-year workers. Temps on regular hours take their 5.6 weeks as paid time off instead, which costs the employer broadly the same. The £10,500 Employment Allowance can reduce an employer's total National Insurance bill, but it is a once-per-employer allowance, not a saving on each worker.

Worked example: a full-time temp on £12.71 an hour

Take a temp aged 21 or over, working 40 hours a week, paid weekly, with holiday pay rolled up at 12.07% and auto-enrolled at the minimum 3% employer contribution, through an agency below the Apprenticeship Levy threshold:

So on the legal minimum wage, a full-time adult temp costs about £16.36 an hour before any margin — roughly 29% more than their hourly pay. For a full-time adult worker, a charge rate close to that level leaves the agency nothing to cover its own costs, so it is worth asking how the numbers add up.

Part-time and younger workers cost less in on-costs. The first £96 a week is free of employer National Insurance, so a temp on 16 hours a week at £12.71 costs about £15.68 an hour. There are no employer contributions up to £50,270 a year for workers under 21 or apprentices under 25, and workers earning £192 a week or less are not automatically enrolled into a pension.

What agencies add on top: the margin

The margin is where agencies differ, and the law does not set it: GOV.UK's guidance on the Conduct Regulations states that they do not regulate the amount of fees agencies charge hirers.

There is no current official figure for a typical margin. The most recent industry-wide average published by the Recruitment & Employment Confederation — a margin of 17.3% on temporary and contract recruitment — relates to the year to March 2019. In the public sector, the Government Commercial Agency reported that schools were paying an average agency mark-up of 38% before its supply teacher framework, and says mark-ups of 15% and below are achievable. It defines mark-up as the amount added on to worker pay and legislative costs.

The last column is why headline percentages confuse buyers: the same £2.50 margin is a 15.3% mark-up on the full employment cost but 48.4% above the worker's pay. When you compare quotes, compare pounds per hour.

Why costs change after 12 weeks

Under the Agency Workers Regulations 2010, an agency worker who works in the same role with the same hirer for 12 continuous calendar weeks becomes entitled to the same basic working and employment conditions as if you had recruited them directly: pay, working time, night work, rest periods, rest breaks and annual leave. If your own staff in the same role are paid more than the temp, the temp's pay — and the on-costs calculated on it — rise from week 13.

Two rights apply from the first day: access to shared facilities such as a canteen, childcare and transport services, and being told about relevant vacancies. Occupational sick pay, pensions and redundancy pay are outside equal treatment — the pension duty comes from automatic enrolment law instead.

Temp-to-perm: when an agency can charge a transfer fee

Taking a good temp on permanently is common, and agencies can charge a transfer fee — but only within the limits in regulation 10 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003:

• Your contract must offer an alternative. A transfer fee term cannot be enforced unless the contract lets you choose an extended period of hire instead of paying the fee.
• The fee window is limited. A fee cannot be enforced if the worker starts working for you directly after the relevant period, which is whichever ends later: 14 weeks from the first day the worker worked for you through the agency, or 8 weeks from the day after they last did.
• Long gaps reset the clock. When counting the 14 weeks, any supply before a break of more than 42 days is ignored.
• The 12-week point is a different rule. Equal treatment under the Agency Workers Regulations and transfer fees under the Conduct Regulations are separate — reaching 12 weeks does not by itself end a transfer fee.

Changes employers should plan for

• Umbrella company PAYE, in force since 6 April 2026: where a worker is employed through an umbrella company, the agency that contracts with the end client — or the end client, if there is no agency — is jointly and severally liable for the PAYE. Ask your agency how it checks its supply chain.
• Guaranteed hours and short-notice payments, expected in 2027: under the Employment Rights Act 2025, hirers will by default make guaranteed-hours offers to qualifying agency workers, and agencies will make short-notice cancellation payments that they can recover from hirers. These rights are not in force yet, and the timing will be confirmed after consultation.
• The Fair Work Agency, since 7 April 2026: it brought together several state enforcement bodies, including the Employment Agency Standards Inspectorate.
• Holiday records, since 6 April 2026: employers must keep detailed records of annual leave and holiday pay for at least six years.

How to compare agency quotes

• Ask for the pay rate, the on-costs and the margin separately — one all-in figure hides where the money goes.
• Check the pay rate meets the National Minimum Wage for each worker's age.
• Ask how holiday pay is handled — rolled up at 12.07% or paid when taken — and confirm it is in the quote.
• Ask whether workers are paid by the agency through PAYE or through an umbrella company, and how the supply chain is checked.
• Agree who tracks the 12-week qualifying period and how pay will change at week 13.
• Read the transfer fee clause: the fee, the extended-hire alternative and the relevant period.
• Compare fill rates and replacement terms, not just the hourly price.

Hiring for construction? Our specialist division has a detailed guide to labourer day rates and the cost of agency labour on site (opens in a new tab). Workers may also find our guide to zero-hours contract changes useful.

Frequently asked questions

How much does a temp cost per hour in the UK?

It depends on the pay rate, the hours and the agency's margin. For an adult on the National Living Wage of £12.71 working 40 hours a week, holiday pay, employer National Insurance and the minimum pension contribution take the cost to about £16.36 an hour before the agency's margin, using 2026/27 rates.

What is a typical agency margin in the UK?

There is no current official figure. The Recruitment & Employment Confederation's most recent published industry average was a 17.3% margin on temporary and contract recruitment, for the year to March 2019. Margins vary with the role, the volume and the length of the assignment, so ask for the pay rate and the charge rate separately.

Is holiday pay included in an agency's charge rate?

It should be. Agency workers are entitled to 5.6 weeks' paid holiday, and the agency, as the employer, pays it. For irregular-hours workers it is often paid as rolled-up holiday pay at 12.07%. Check that your quote says how holiday pay is covered.

Do I have to pay a fee if I hire a temp permanently?

Only if your contract provides for it and offers an extended hire period as an alternative, and only if the worker starts with you within the relevant period — whichever ends later of 14 weeks from their first day with you through the agency or 8 weeks after their last. After that, a transfer fee cannot be enforced.

Why does the charge rate go up after 12 weeks?

After 12 continuous calendar weeks in the same role with you, an agency worker is entitled to the same basic pay and working conditions as your comparable direct employees. If your staff are paid more than the temp, the temp's pay — and the costs based on it — rise from week 13.

Do agency workers get a workplace pension?

Yes, if they are eligible. The agency must automatically enrol workers aged 22 to State Pension age who earn over £10,000 a year (£192 a week) and pay at least 3% of their qualifying earnings. This comes from pensions law, not from the 12-week rule.

Sources

1. GOV.UK — National Minimum Wage and National Living Wage rates (opens in a new tab). Accessed 22 September 2026.
2. HMRC — Rates and thresholds for employers 2026 to 2027 (opens in a new tab). Accessed 22 September 2026.
3. GOV.UK — Holiday entitlement: calculating leave (opens in a new tab). Accessed 22 September 2026.
4. GOV.UK — Holiday entitlement: holiday pay (opens in a new tab). Accessed 22 September 2026.
5. The Pensions Regulator — Automatic enrolment earnings thresholds (opens in a new tab). Accessed 22 September 2026.
6. The Pensions Regulator — Work out who to put into a pension (opens in a new tab). Accessed 22 September 2026.
7. legislation.gov.uk — Agency Workers Regulations 2010, regulations 6, 7, 12 and 13 (opens in a new tab). Accessed 22 September 2026.
8. legislation.gov.uk — Conduct of Employment Agencies and Employment Businesses Regulations 2003, regulation 10 (opens in a new tab). Accessed 22 September 2026.
9. GOV.UK — Overview of the Conduct Regulations 2003 (opens in a new tab). Accessed 22 September 2026.
10. HMRC — PAYE rules for labour supply chains that include umbrella companies (opens in a new tab). Accessed 22 September 2026.
11. GOV.UK — Plan to Make Work Pay and Employment Rights Act: timeline update (opens in a new tab). Accessed 22 September 2026.
12. GOV.UK — Employers' liability insurance (opens in a new tab). Accessed 22 September 2026.
13. Recruitment & Employment Confederation — Recruitment industry took in a record £38.9 billion despite a difficult year (January 2020) (opens in a new tab). Accessed 22 September 2026.
14. Government Commercial Agency — Supply teachers: agency mark up and the impact on worker pay (opens in a new tab). Accessed 22 September 2026.