Most owners look hard at an agency fee only after the shortlist arrives. The candidate is good, the invoice says £8,000, and the question “was that worth it?” turns up too late to change anything. The better moment to ask is before you brief the agency.
This post is for UK SME leaders who are weighing recruitment agency fees against running the search themselves. It gives you the typical fee range, a benchmark for what hiring costs without an agency, a break-even sum you can run in ten minutes, and a plain view on when each route wins. I am vendor-free, so I have nothing to sell you on either side.
Published UK fee guides quote 15% to 25% of first-year salary for permanent placements, with specialist and senior roles higher. One guide gives a range of 15% to 25%. Another puts the range at 15% to 30%, with most mainstream roles at 15% to 20%. A third says 20% to 30% for specialist, technical or senior roles.
Treat those as a guide, not a benchmark. Every one of them is published by an agency or a recruitment vendor, and I could not find an association or regulator survey of fee levels. Your own terms of business are the only figure that matters. Here is what common percentages look like in pounds:
| First-year salary | Fee at 15% | Fee at 20% | Fee at 25% |
| £28,000 | £4,200 | £5,600 | £7,000 |
| £40,000 | £6,000 | £8,000 | £10,000 |
| £60,000 | £9,000 | £12,000 | £15,000 |
Under the usual contingency model, the fee is payable when the person starts. Ask for the terms in writing before you brief anyone, because the fee base, payment timing and what happens if the hire leaves early all vary.
The CIPD median cost per hire for employees below senior level was £1,500 in 2024, and Omni’s summary of the 2026 report puts it at £2,000. The 2024 CIPD report counts in-house resourcing time, advertising costs and agency or search fees in that figure, and only 207 respondents could give it for other employees, with estimates accurate to within 20%. The 2026 summary also says recruitment is getting more expensive for the first time since 2015, with the senior manager median up to £3,500.
That comparison is not like for like. The CIPD median covers every method, and many of those hires used no agency at all. It still tells you what “normal” looks like. An £8,000 fee on a £40,000 hire is four times the median cost of a typical hire. Sometimes that premium is worth paying. You cannot judge that unless you know your own number.
The same summary says only 19% of employers measure the return on their hiring. The formula is simple: add your internal costs (recruiter, hiring manager and interviewer time, tools, referral bonuses) to your external costs (job boards, adverts, agency fees, checks), then divide by the number of hires. Work it out for your last three hires before you sign any agency terms.
Compare the fee with your own fully loaded cost of running the search, then adjust for how fast the role fills and how much a wrong hire would cost you. Four steps do it:
Here is a worked example with illustrative inputs. Replace them with your own.
| £40,000 role | Agency route | In-house route |
| Fee at 20% | £8,000 | £0 |
| Staff time (30 hours at £35 loaded) | £0 | £1,050 |
| Advert and job board spend | £0 | £500 |
| Tools and scheduling | £0 | £150 |
| Direct cost | £8,000 | £1,700 |
The gap on direct cost is £6,300. The agency wins if it saves you more than that in delay or in avoided mistakes. If the role sits empty for four extra weeks and each week costs you £1,500 in lost output, that is £6,000, and the picture changes. Run it with your own numbers, not mine. The point is to make the choice a sum rather than a feeling.
An agency earns its fee when the role is specialist, the search is urgent, or nobody on your team has the time to run it. Those three cases have something in common. You are buying access or capacity that you cannot build quickly. A niche role where the right candidates are not looking at job boards is a fair example. So is a confidential senior search, or a hire you need in a fortnight while your only HR person is on leave.
Before you sign, ask six questions:
You may not get every answer you want. Asking tells you whether you are dealing with a partner or a salesperson.
In-house hiring wins when the role repeats, applications are plentiful, and you have a clear process for screening and deciding. The CIPD data points to where the effort goes. In the 2026 summary, 58% of employers reported more unsuitable applicants and 37% reported excessive applicants to process, up from 24% in 2024. Screening is the bottleneck, not attraction. The same summary says 44% of employers use AI in some form but only 16% use it for screening, so most are still doing the sorting by hand.
That gap is your opportunity. Five steps usually repay the effort of automating:
Anything that scores or ranks candidates needs a named person who can change the outcome. My post on where UK SMEs should automate recruitment covers the tools, and Too Many Job Applicants explains why screening quality is where SMEs lose ground.
Here is how the hybrid sum looks for a firm making 12 hires a year, as an illustration. Say 3 are specialist roles where you will use an agency, and 9 are repeatable roles at £40,000. If you used an agency for all 9 repeatable roles at a 20% fee, that is £72,000. Run in-house at the illustrative £1,700 direct cost from the table above, it is £15,300. The £56,700 gap is before you count the cost of delay, and it is the reason the repeatable roles are where an in-house process pays back first.
You do not have to choose one route for every role. A sensible pattern is to use an agency for the hard-to-fill role and run the repeatable roles in-house with a tight process. The CIPD also finds that employers expect the Employment Rights Act to push costs up, so the pressure to know your numbers is rising. My post on the six-month window for UK SME hiring sets out how to plan around it.
Judge any route by whether the person is still in post at six months, not by whether the offer was accepted. A cheap hire who leaves in the first quarter costs you the search twice. An agency hire who leaves early may be covered by the agency’s terms, which is why the rebate question matters. In-house hires have no such cover, so your onboarding has to do the work. My post on new hire attrition for UK SMEs shows where early leavers tend to slip away.
The timing is getting sharper. Law-firm guidance confirms that the unfair dismissal qualifying period drops to six months from 1 January 2027. This is context, not legal advice, and a qualified employment specialist can tell you how it applies to your contracts. For hiring, the practical point is that the first six months of any new hire now matter more, whichever route you used to find them. Track retention at six months for every hire, and compare the agency route and the in-house route on that number as well as on cost.
Cost your last three hires, sort your open roles into specialist and repeatable, and pilot one change. Here is the order I would work in:
Stop treating the agency fee as a fixed cost of hiring. It is a choice, and you can price it. Do the sum, then decide.
Published UK fee guides quote 15% to 25% of first-year salary for permanent roles, with specialist and senior roles often higher. These are agency-published figures, so check your own terms of business.
It can be, when the role is specialist, urgent or confidential, or when you have no time to run the search. Compare the fee with your own cost of running the search and the cost of leaving the role empty before you decide.
The CIPD 2024 report found a median of £1,500 for employees below senior level and £2,000 for senior managers and directors. A summary of the 2026 report puts them at £2,000 and £3,500. The figures include in-house time, advertising and agency fees.
Often, yes. Published guides say that giving one agency an exclusive brief can earn a lower percentage, and that volume or longer-term arrangements can help. Ask about the fee base, the rebate period and payment terms as well as the headline rate.
Not as a rule. AI-supported hiring changes where you need an agency, because it takes on screening and scheduling work for repeatable roles. Specialist and confidential searches still depend on networks and judgement.
| Sabiha is a UK talent acquisition director with 16 years of hiring experience across the UK, Dubai, South Africa and Malaysia. She helps UK SMEs design hiring and retention systems that use AI responsibly. Her first book, on using AI to win and keep talent in UK workplaces, is published Autumn 2026 with Trotman. |
Global Talent. Ethical AI. Strategic Hiring. Sustainable Retention.
