Types of Employment Fees
Placement fees are the main source of income for private employment agencies. There are numerous methods of fee payment, which include:
- Employer-paid fees. The employer assumes total responsibility for the fee. This is the case in many employment job placements.
- Applicant-paid fees. The employee assumes total responsibility for the fee.
- Partial-paid fees. Prior to job acceptance, the employer and employee reach an agreement to each assume a portion of the fees.
- Fee reimbursed. The employee initially pays the fee, but the employer agrees to reimburse the employee after a certain period of time working on the job.
- Partial fee reimbursed. The employer agrees to reimburse a portion of the fee after a stipulated period of employment.
The employment agency is concerned with being paid for its services and the majority prefers that the employer pay for most positions. Regardless of the contract you sign with an agency to pay its fee, you are still entitled to pursue any of the above options with the prospective employer. In some cases, the employment agency may assist you in negotiations to obtain some splitting of the fee with the employer.
Check to see what laws apply to agency fees in your state. You may be able to examine the fee scales of agencies you are considering. Fees vary widely from agency to agency, but do not choose an agency simply because it charges the lowest fees. Each individual job seeker's needs are different. It is better to choose an agency for its services and its understanding of your goals than by its fee.
Fees can range from one-half of your first month's salary to 5, 10 or even 30 percent of the first year's salary. These fees are calculated on your gross salary, not your take-home pay.
If you, the job seeker, are obligated to pay the employment agency the fee, it is usually due on the day you begin work. Some agencies will extend you the privilege of paying by installment over a short period of time. Most agencies will help you arrange financing through a bank or other financial institution. Some agencies offer this help without additional charge and some add on a fee for this extra service.
Ask in advance about the payment terms of your agency. These should be spelled out in your contract. Some agencies that accept installment payments will also grant a discount for payment in full when you accept a position. Also, check to see if the employment agency fee is tax-deductible.
Although the first type of fee, the employer-paid option, is the most common, it also has some conditions attached to it of which you should be aware. If you do not meet your obligations in an employer-paid fee job, it could cost you money.
A "fee paid" job means that the employer will pay the entire fee and the applicant will be charged none, if the applicant fulfills the conditions of the contract. However, if you accept a "fee paid" job but do not report for work, are discharged for cause or leave on your own accord, you may be required to pay the fee or some penalty service charge.
Some agencies handle both employer- paid and employee- paid fee positions. If you go to an agency because of an employer fee paid position, but the agency or the company offers you another job, find out if there is a fee before you accept it.
