At Twente Personeelsdiensten, we often hear that employment agencies would be too expensive. Although we are competitively priced compared to our competition, we too get this comment regularly. Therefore, we would like to explain what makes up the cost price of an employment agency. This offers a better understanding of the costs incurred "behind the scenes". All these costs are calculated before the margin is added. Incidentally, the margin is not just profit, as this also pays for office staff, rental costs and the like.
Gross Wage
The first element is the hourly wage. This wage depends on the legal minimum wage, the collective agreement salary scales or a client's terms of employment. We must follow the employer's hirer's remuneration. This is the remuneration that applies to employees employed by the client, working in an equal or equivalent position to the temporary worker.
There is also the Private Supplementary Employment and Disability Insurance Act (PAWW). This private scheme extends the statutory WW or wage-related WGA benefit and is regulated by collective agreement. Employees who participate in the PAWW through their employer can claim it in case of WW or WGA benefits.
Reservations
Then there are reserves to be paid out, such as leave and non-statutory leave. Senior days may be added for older employees. Depending on the client's collective agreement, an employee may also have ADV days, which in some collective agreements, such as in the construction industry, can amount to 20 per year. The Metaal & Techniek collective labour agreement, which many of our clients apply, often has 13 ADV days per year. All these days off must be included in the agency's cost price.
Working in a collective agreement with 13 ADV days (so a total of 38 days off per year); Truck mechanic (full-time/part-time) | Twente Personeelsdiensten Wierden
Employees may also be entitled to short-term leave for urgent, unexpected or personal situations. This leave can last from a few hours to a few days and the employer continues to pay salary during the leave. Holiday pay is also an important part of the cost and should be included in advance.
Some years there are also more public holidays to be paid to employees than other years, these are also included in the calculation.
Social security charges and pensions
As an employer, you pay various social charges, including contributions for the Sickness Act (ZW), Unemployment Act (WW), Disability Insurance Act (WAO), Work and Income according to Labour Capacity Act (WIA), and childcare contributions. They also include health insurance (Zvw) and pension (STIPP Plus pension).
Another premium is, for example, the Occupational Disability Fund (Aof) premium, which is made up of two rates depending on the size of the employer. For the Sickness Benefits Act, there is a differentiated premium Werkhervattingskas (Whk), which depends on the risk.
Collective bargaining obligations
An important part of a temporary employment agency's cost price is its collective bargaining obligations. These obligations ensure that we can offer our employees fair working conditions and comply with legal requirements. Here are some of the most important collective agreement obligations that affect the cost price:
- Sustainable Employability: Many collective agreements contain a percentage to be reserved for the sustainable employability of employees. This budget is used for training and development so that employees can improve their skills and increase their employability. This not only promotes employee career development, but also ensures that companies have well-trained and motivated employees.
- Social fund: Most collective agreements require contributions to a social fund. This fund supports various initiatives aimed at employee welfare, such as career guidance, working conditions and reintegration projects. These contributions are mandatory and are used to provide collective benefits to all employees covered by the relevant collective agreement.
- Pension scheme: Participating in a pension scheme is often an obligation under the collective bargaining agreement. The cost of this scheme, including employer contributions, is significant and should be included in the costing. A good pension scheme is essential for employees' long-term financial security.
- Senior days: Additional days off (senior days) may be mandatory for older workers. These extra days off are designed to ease the workload for older workers and promote their health and employability.
Administrative Reservations
In addition, there are administrative reserves such as a percentage for incapacity for work, vacancy risk and transition compensation. These reservations are necessary to ensure we are prepared for any risks and liabilities that may arise during the employment contract.
Phase
For each Phase A, B or C, there are different obligations and cost prices for the employment agency. These are also included in the calculation. In Phase A, for example, workers have a temporary contract and fewer rights, while in Phase B and C the rights and costs increase, because workers are then entitled to a permanent contract and more social securities, for example.
More info on phase counts, cost prices and obligations of an employment agency can be found on the website of the collective labour agreement to which we are affiliated; About the ABU - ABU
Conclusion
As you can see, the cost price of a staffing agency is made up of many components that all contribute to the final rate. This ensures that, as a temporary employment agency, we can offer our services in a responsible manner, while complying with all legal and collective bargaining obligations. Understanding these costs helps in appreciating the value we provide as a temporary employment agency, not only for employees, but also for clients.
At Twente Personeelsdiensten, we continue to do our best to maintain competitive prices and be transparent about our cost structure. This ensures that neither our clients nor our employees are caught unawares. In addition, clients really know that they have a reliable and socially responsible partner in Twente Personeelsdiensten.
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