Agent's % if converting to perm

[ContractorBanking]

An ex-colleague, who is contracting direct with the end client, has been asked if he wants to go permie.

I don't think he will convert as he's an out an out contractor, but curious to know, typically what would be the agent's fee if a contractor converts to permie?

Since the client saved 14% of agency margin, my mate was able to negotiate splitting the fee 50/50 with client, so he got a 7% increase on contract inception, and the end client 7% of the fees they would have paid.

So, based on an agency charging 14% contractor margin, what does that translate to a permie fee?

[northernladuk]

I'm not understanding the relevance of the ex-colleague if he's direct??

[ContractorBanking]

He's an ex-colleague as we worked at the same place from 2007-2010.

He's now contracting directly with a client for the past 2 years and they've asked if he could go permie.

Much the same way he managed to leverage the agency margin to his advantage, he wants to do likewise with the permie offer. He's been asked to come up with a figure and knowing what the agency cut would've been, greatly helps his cause..

hence the question...

I'm not understanding the relevance of the ex-colleague if he's direct??

[jbond007]

He's an ex-colleague as we worked at the same place from 2007-2010.

He's now contracting directly with a client for the past 2 years and they've asked if he could go permie.

Much the same way he managed to leverage the agency margin to his advantage, he wants to do likewise with the permie offer. He's been asked to come up with a figure and knowing what the agency cut would've been, greatly helps his cause..

hence the question...

Usually varies from 1-3 months salary as agent commission. But it is usually after completion of probation period. More senior position may be around 6 months salary as commission

[fidot]

So, he's basically trying to negotiate a "golden hello".

[clearedforlanding]

This leads me to something to watch out for..

With the trend for contract to perm recruitment the contract margin is being front loaded to 25-30% to compensate for the one off payment made for signing at perm stage.

[clearedforlanding]

More senior position may be around 6 months salary as commission

An specialised exec recruitment company (as opposed to an agency "doing" exec recruitment) can easily charge a year and get it up front if it is going to be a long hunt.

[northernladuk]

I must be being really stupid here but the idea of payments to the agency is because they 'own' the contractor so the client has to buy the agent out of the contractual obligations. The agent makes money out of the contractor. If he's perm none of that exists. They pay his invoices currently but going perm he'd go on the books as PAYE. They are completely different situations so you can't compare one with the other or use any kind of model that would work in am agent/client model.

Surely all he should be coming up with is a wage he would be happy with? None of this buy out nonsense. I've seen the odd contractor successfully go perm but I've also seen a bucket load of situations where the client asks, the contractor puts a similar rate to what he's on now and the client ends the conversation there.

[clearedforlanding]

Surely all he should be coming up with is a wage he would be happy with?

Agreed. I would dedicate my energy to negotiating on salary which is a recurring payment rather than trying to negotiate a "sign on fee" that will be cannibalised from a salary.

[MrMarkyMark]

but I've also seen a bucket load of situations where the client asks, the contractor puts a similar rate to what he's on now and the client ends the conversation there.

I usually suggest that they would have to offer what I would end up with now.
Usually stops any "time wasters" in their tracks.

One time I had someone kicking around 120K basic with potential 25-30K bonus, this was for a BI Practitioner role. Having known others doing a similar thing, it could involve working 12 hour days, so I declined to progress it.