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Temp agencies. How does it save a company money when they hire people through a temp agency?

Wouldn’t it cost less money for the company to have Human Resources Dept, interview and hire for themselves?

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5 Responses to “Temp agencies. How does it save a company money when they hire people through a temp agency?”

  1. Baby Blue said :

    No, time is money

  2. rejoycevermore said :

    It saves a company money by cutting the cost of employee insurances: Worker’s compensation, health insurance and unemployment insurance. Those are taken care of by the temporary agency. They also don’t pay the temporary employee for time off or holidays.

    The purpose in most cases for a company using an agency isn’t so much to save money as it is to have some else weed out the undesirable employees. When the agency’s contract for that employee is over, they can either keep them or dismiss them. If they’ve discovered that the temporary employee isn’t a good fit, they can let the contract come to an end without worrying about paying the temporary employee a severance package upon dismissal.

  3. Nobrainr said :

    No it doesn’t. Let’s examine the scenarios in a one month period.

    By using a temp for a set period of time, they pay a set fee per hour or day to the agency which then pays the worker. They can then release the worker at the end of the time that they need them and don’t have to pay unemployment or have their unemployment premiums increase.

    In this scenario, the company pays $2,000 for a temp for one month. They also don’t have to spend any more money in finding appropriate workers.

    By having an HR department, in this case, one person to do the hiring process and fees for back-ground checks and drug tests etc. Then the employee gets benefits, and so on. Also, if they then fire the employee because they don’t need them anymore, they pay higher unemployment premiums.

    In this scenario, the company pays (assuming all employees are paid the same for ease of math):

    Per Person:
    $2,000 for the month in Salary
    500 for the employer’s portion of payroll taxes, federal, state, local
    750 for employee’s benefits

    $3,250 Total; $6,500 for both

    Just in this admittedly simplified example, by cutting out the HR and having the temp agency do it for you and paying a set fee for a person to come work as a temp, you have a $4,500 savings to the business owner.

  4. jed slade said :

    It is more costly per hour in fees to the agency,but more companies were going this way instead of taking on permanent staff,with the national ins,contributions,pension rights etc etc.When a crisis or downturn crops up they just dump the agency workers ,job done.No severance pay ,no notice to pay,no redundancy to pay.This method is a back door way to employ people without any responsibility or giving them any rights,some even make the workers supply their own cell phones ,boots ,helmets and any other safety equipment,this is not illegal but the employer must make sure all workers are so equiped under the duty of care and health and safety at work act.

  5. Nicolasa Bungy said :

    I have noticed that over the course of creating a relationship with real estate entrepreneurs, you’ll be able to come to understand that, in every single real estate deal, a fee is paid. In the end, FSBO sellers tend not to “save” the commission payment. Rather, they fight to earn the commission by simply doing a strong agent’s work. In accomplishing this, they commit their money along with time to execute, as best they will, the duties of an real estate agent. Those responsibilities include exposing the home through marketing, introducing the home to prospective buyers, building a sense of buyer urgency in order to prompt an offer, organizing home inspections, handling qualification checks with the lender, supervising maintenance tasks, and assisting the closing of the deal.


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