How do recruiters agencies work, particularly in Australia? How much they charge the employer for a contract position? Is it better for a job seeker to apply for a specific opening by a recruiter or directly from the remuneration standpoint?
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The exact details vary but typically, recruitment agencies are paid on a commission basis. For permanent roles this is often a percentage of the starting salary of the candidate while for contract roles it is an on-going fee applied each billing period of the contractor as long as the placement lasts. In all cases, the fee is paid by the employer.
Some will work on a flat fee structure where the employer pays a predetermined fixed amount upon a successful hire but (at least in the UK) this seems to be quite rare.
In rare cases, when there is no recruiter involved employers will pass some measure of the "savings" on to the candidate but in my experience this isn't especially common. A savvy candidate can sometimes use knowledge of this "savings" to negotiate a better salary, which can be an extra motivation to to the idea of dealing directly with employers.
The flip-side is that some companies will only recruit through agencies, either because they like the convenience of having unsuitable candidates filtered out or because of contractual exclusivity arrangements they have already agreed. This means that avoiding recruitment agencies entirely will narrow your options, but if you have the option for a particular vacancy to choose between applying directly with the company or to applying through a recruiter there is generally little benefit to you as the candidate in making use of the agency.
It's worth noting that there is another category of recruitment agency, where the employee pays a fixed fee to a recruiter and the recruiter finds them a job. These constructions are very rare however, so when a recruitment agency approaches you offering their services, you shouldn't assume they work with such a fee. Indeed I would be very wary of any agency that asked for the candidate to pay a fee - especially if this was an upfront fee as this would be a major red flag that such an agency was a scam or unethical at least.
I can give one example I recently had (in Sydney/Australia): I was on a day rate of $500 a day. Having built a good rapport with the client and the client having an absolutely incompetent project manager I happened to see how much the client was paying for me: $830 a day. Not to mention he was also charging me for sick days/public holidays etc which I wasn't getting paid at all for. Needless to say the recruitment agent was not happy (with the client) when I mentioned this. Currently I am on a contract with two recruitment agencies in the middle (one here and one overseas). I'd imagine what I am getting paid is vastly less than what the client is paying them. In short, recruiters in Australia (Sydney at least) are pretty much like leeches, wherever possible avoid them if you can.