Employment Agency Fees
Definition of 'Employment Agency Fees'
An employment agency works to match employers with suitable employees. There are both public organizations and private companies that work as employment agencies. There is usually a fee for the service of matching employers and employees. Employment agencies have different methods of handling the fee issue.
There are two types of employment agency fees: The employer-paid fee and the applicant-paid fee.
Under the employer-paid fee, the employer assumes the total responsibility for the fee. The employee pays nothing. Traditionally, this is the more common type of fee arrangement and is preferred by employment agencies.
Under the applicant-paid (or employee-paid) fee arrangement, the employment agency fees are costs charged to the applicant for the service of finding an employer. This is normally a one-time fee charged to the client-employee for obtaining employment.
Investopedia explains 'Employment Agency Fees'
With the proliferation of telecommunications and IT companies, there is a different type of employer-paid fee arrangement. Some employment agencies have become the employer and a company can contract for employees from them. The company pays the employment agency a monthly fee for employees instead of to the employee. The employees supplied by the employment agency remain employees of the agency, not the company.