Is your Agency charge rate really sustainable?
Is your Agency charge rate really sustainable?
In a market where margins are tight and pressure on costs is constant, it’s understandable that agency charge rates get close scrutiny. On paper, a low rate can look like a win.
But in today’s compliance-focused environment, the more important question is this:
"What’s sitting behind that rate - and does it stand up to scrutiny?" Low cost doesn’t always mean low risk
One area many businesses don’t revisit often enough is how temporary workers are actually paid. That includes whether workers are paid directly through PAYE, or via umbrella or intermediary arrangements somewhere within the labour supply chain.
In many cases, businesses assume compliance is being handled correctly - without ever seeing the detail.
Why payroll models matter more than ever
HMRC has increased its focus on labour supply chains over recent years, particularly where umbrella or intermediary models are involved. While many arrangements are legitimate, others have drawn attention due to incorrect operation of PAYE or National Insurance.
The challenge for end clients is that risk doesn’t always sit where it’s visible. If something isn’t operating correctly further down the chain, it’s often the end client who ends up answering difficult questions later.
What “reasonable care” actually looks like
Best practice has shifted. It’s no longer enough to assume compliance, it needs to be understood and evidenced.
That means:
Knowing who pays your workers
Understanding how PAYE and NI are applied
Being clear on whether umbrella or intermediary arrangements are involved
Requesting evidence and audit trails, not just reassurance
Reviewing arrangements regularly - not just once and forgotten
These steps help demonstrate reasonable care and significantly reduce exposure if your labour supply chain is ever reviewed.
The real cost of a “cheap” rate
A low charge rate can only be achieved in a limited number of ways. When compliance, correct PAYE, National Insurance, holiday pay, insurance, administration, and proper due diligence are all factored in, sustainable rates tend to land within a realistic range.
When they fall well below that, it’s fair to ask where the savings are being made - and whether that saving is worth the potential risk.
At Thorn Baker, transparency is non-negotiable. We’re open about how our workers are paid, how our payroll operates, and how our supply chain is structured - because protecting our clients’ businesses matters just as much as filling roles.
If you haven’t reviewed your agency’s payroll and compliance processes recently, now is a sensible time to ask the questions. Sustainable recruitment isn’t just about today’s rate, it’s about confidence, continuity, and peace of mind long after the placement starts.
Compliance is our badge of honour.
We don’t outsource or dilute responsibility. All of our processes are managed in-house, including payroll, compliance, and auditing - giving our clients full transparency and confidence in their labour supply chain.
If you want to work with a recruitment partner where compliant PAYE, clear audit trails, and due diligence aren’t optional extras - but the standard - we’re always happy to have a conversation.