Agency mark-up rates and the impact on your workers’ pay

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In this blog, Crown Commercial Service (CCS) explains what mark-up is, why it matters, and what you can do to make sure you and your workers get the best rates

It’s really important to pay attention to the agency mark-up rate when sourcing supply teachers and temporary staff through recruitment agencies, as it doesn’t just affect how much you pay the agency. It can also make a big difference to how much your worker will get paid.

What is mark-up?

Put simply mark-up is the fee the agency charges you for finding a worker. It is a percentage added on to worker pay and legislative costs to make up the total rate you pay. Legislative costs include pension and National Insurance payments, apprenticeship levy and holiday pay, all of which are a percentage of the worker’s pay.

Why does it matter?

It’s important to know what mark-up rate your agency is charging so you can be confident you are getting a competitive rate – not just for your school, but also for your temporary workers given it impacts what they get paid too.

Workers typically register with several agencies and exclusivity is rare. As a worker is likely to be attracted by the best pay rate, by negotiating your agency mark-up, you are putting your school in a good place to attract the best workers.

Understanding the importance of mark-up will also put you in a great position to negotiate with agencies, something you can – and should – do. By negotiating on the mark-up rate you will benefit from:

  • Lower charge rate to your school = savings.
  • Enhanced worker pay = increased opportunity to secure and retain workers.
  • Improved worker benefits = satisfied and committed workers, benefiting the children they teach.

The impact

Before we launched the Supply Teachers and Temporary Staff framework, the average agency mark-up schools were being charged was 38%. On a daily charge rate of £200 this would breakdown as:

  • Worker pay – £101.81.
  • Legislative costs – £42.19.
  • Agency fee – £56.
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Under the framework, agency mark-ups of 15% and below are achievable. On a charge rate of £190, this would be:

  • Worker pay – £116.89.
  • Legislative costs – £48.41.
  • Agency fee – £24.70.

In this example you pay £10 less per day, and your worker receives £15.08 more.

CCS – here to help

The CCS framework gives you full transparency of costs, including the mark-up, helping you to make a real difference to your school budget and your temporary workforce.

An online agency selection tool will show you what mark-up rates agencies in your area are offering under the framework. These are maximum rates, so by negotiating you will be able to reduce these rates. This is what Academies Enterprise Trust did and they are on track to save £119,000.

If you would like to find out how CCS can help you please get in touch:

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