Buying Solutions - Managed Services

For Employment Agencies (who introduce work-seekers for employment by the customer) the pricing is very simple – the Agency Fees are expressed as a percentage of the first year’s annual salary, pro-rated to the number of months required for the fixed term employment. They are subject to a minimum of three months and a maximum of twelve months for the purposes of calculating the Agency Fee. For fixed-term employment the only discount available is the Prompt Payment Discount.

For Employment Businesses (who hire work-seekers to work under the supervision of the customer) the pricing is simplified into a matrix of worker’s pay-rates that all suppliers must adhere to. The rates are updated each year, on or after 1 April 2010. It is for the customer to decide which pay point they will pay for the work-seeker’s services, depending on the set of skills and experience required. Paying less for worker-seekers typically means getting less skilled people. If pay rates are too low there may be no worker-seekers available.

• How are hire rates made up?
• Do we pay for meal breaks?
• How do I find a price for a particular role?
• What about pay rates in high-cost areas?
• Are there discounts available?
• What are the rates for unsocial hours and overtime?
• What else do I need to know about prices?

How are hire rates made up?

There are four elements of the total charges payable. The pay to the worker is most important.

Total charge = Pay to (PAYE) worker + WTR element + employers NI element + Supplier fee

• Pay to (PAYE) worker – this is the amount that must be paid to the work-seeker by the supplier
• WTR (Working Time Regulation) element – an amount paid in recognition that the Employment Business (supplier) must provide for 28 days paid holiday annually to the work-seeker
• Supplier fee – the fee paid to the Employment Business for sourcing and providing the temporary worker. The fee varies by pay band/range, not by pay point. It is a monetary value, not a percentage of pay. Since the supplier earns a fixed fee per hour/day in a given pay band, there’s no financial incentive for the supplier to up-sell within a pay band

• Employer’s NI element – an amount paid to reflect the NI liability of the Employment Business as employer. The liability to pay the NI is the supplier’s – it is their regulatory responsibility

Where the work-seeker is engaged as a limited company contractor, then the pay to worker rate becomes the sum of:

Pay to (PAYE) worker + WTR element + NI element.

In all cases the Employment Business earns only the Supplier Fee.

Do we pay for meal breaks?

No. Under the framework agreement you should only pay for hours actually worked, not for meal or other breaks.   

How do I find a price for a particular role?

•  There are two things you need to know to get an Employment Business’s price:
  • Which job band/range applies to the role, as decided by your organisation
  • What degree of skills and experience is required to cover the role effectively and therefore what pay point applies.

What about pay rates in high-cost areas?

There is provision to pay supplements in high-cost areas like London. There are three recognised areas Inner London, Outer London and fringe area but this can be applied elsewhere if you have need. The supplements apply to the pay to (PAYE) worker element of the total charge. You are not obliged to pay supplements for being in a high-cost area – it is something to be agreed with the Employment Business. However, if the pay to worker is too low you risk not attracting quality candidates.    

Are there discounts available?

Yes, there are. In general, the best way to secure discounts is by signing a Service Level Agreement (SLA) with a supplier. Depending on the particular supplier this is the range of possible discounts:

• Prompt Payment Settlement Discount
• Volume
• Business Efficiency Discount
• Candidate-introduction Discount

The detail of how these discounts work is explained in the Commercial Specification.    

What are the rates for unsocial hours and overtime?

Overtime is not recognised for temporary workers, so no premium applies.  

The rates for unsocial hours are in line with Agenda for Change and allow for uplift in the pay to (PAYE) worker as follows:  

* midnight to midnight

As Band 10 is an artificial creation beyond normal pay ranges, the uplifts are not intended to apply above Band 9.

You are not obliged to pay supplements for unsocial hours – it is something to be agreed with the Employment Business. However, if the pay to worker is too low you risk not attracting quality candidates.

What else do I need to know about prices?

Your organisation should attempt to manage pay to worker rates as a whole, to ensure that the rates remain competitive – neither too low nor too high.

Bear in mind that placement fees can become significant if you do not recruit in a planned way work-seekers who are or who have been hired to your organisation.