How employment agencies in Singapore make money

Employment agencies can make a lot of money by providing services to their clients.

How do employment agencies in Singapore make money?

The first way is to find people to fill in a permanent job vacancy for their client.

They will bill their client a commission based on the salary of the applicant. 

If the applicant gets the job at the rate of $5000 per month, and the commission is 20% of annual salary, that means the employment agency makes $12000 in commission.

If the client wants to find a candidate for a junior position, the commission charged is just one month salary of the job applicant.  The employment agency will bill their clients when the candidate starts work.

The second way is by placing temporary or contract staff under their payroll to work in their client office.

The profit margin is at least 20%.

That means when the temporary staff earns $6 per hour, and there is a mandatory contribution of $1.20, the employment agency will bill the client $10 per hour. 

Since the employment agency pays $7.20 to the temporary staff as salary and mandatory contribution, there is a $2.80 profit.

The $2.80 includes insurance premium such as work injury and other mandatory employee insurance.  Some temporary staff are entitled to medical reimbursement and vacation leaves.

The third way the employment agencies make money is by providing payroll service.

They will help the client to run the payroll, and bill the client for the service. 

If the client is a large company, the billing can take the form of a fixed amount per headcount.

Sometimes the employment agencies which have license to hire foreigners and bring them in will bill both client and the foreign workers.

In some cases, the foreign workers have to pay the agency fees, and the client gets the workers free of charge.

In the context of Singapore, the maximum commission that the employment agencies can collect from the foreign workers is 2 months’ salary.