How do employment agencies make money off of direct hires? Originally told that the position was direct hire but now it has turned to temp to hire.


A recruiter will enter an agreement with the hiring company to receive a percentage of the annual salary of the new employee. Typically this is 15-20% of the annual agreed salary, but lately I've been seeing more expecting 25%. Each agreement is different, but it's unlikely that the change in the terms of employment is related to the recruitment agreement. I would suspect it's more likely to be related to a situation in which the company was burned by a bad recruit.

If it is related to the recruitment agreement, it will likely be a contingency clause requiring the recruit to remain in the employment agreement for a specific period of time. Each agreement is unique though, and they will not share their agreement with outside parties.

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