Commercial terms
What is margin in recruitment?
Margin is the difference between what a hirer is charged and what it costs to supply the worker — pay, employer National Insurance, holiday accrual, pension and the apprenticeship levy.
The costs sitting between the pay rate and the charge rate are substantial and are frequently underestimated at the point a rate is agreed, which is how assignments end up unprofitable.
Margin erosion happens quietly. A rate agreed eighteen months ago against costs that have risen since is still being charged because nobody revisits live assignments.
Transparency about it varies, and there are circumstances — particularly where a worker's pay is affected — where what is in the rate has to be explained rather than merely charged.
What goes wrong in practice
- Rates set without a full build-up of employer costs.
- Long-running assignments never repriced as costs rose.
- Margin assumed uniform across a client when rates were agreed piecemeal.