1. What Is an Employment Agency?
An employment agency connects job seekers with employers. It may specialise in temporary staff, permanent placements, or niche industries. Agencies earn money through placement fees, commissions, or contracts with businesses.
2. Why Start an Employment Agency?
The recruitment industry is one of the fastest-growing in the UK. Starting an agency allows you to:
- Help people find work
- Build long-term business relationships
- Operate with relatively low startup costs
- Earn recurring income from placements
3. Decide on Your Agency Type
Before setting up, choose your focus:
- Generalist Agency: Covers multiple industries
- Specialist Agency: Focuses on sectors like healthcare, IT, or construction
- Temporary Staffing Agency: Supplies workers for short-term roles
- Permanent Placement Agency: Finds candidates for long-term positions
4. Register Your Business
- Choose a business structure: Sole trader, partnership, or limited company
- Register with HMRC (for sole traders) or Companies House (for limited companies)
- Open a business bank account
5. Legal Requirements in the UK
Employment agencies must comply with:
- Employment Agencies Act 1973
- Conduct of Employment Agencies and Employment Businesses Regulations 2003
- GDPR for handling candidate data
- Equality Act 2010 to prevent discrimination
6. Licences and Permits
Most agencies do not need a specific licence, but you must:
- Register with the Disclosure and Barring Service (DBS) if placing roles involving vulnerable people
- Comply with sector-specific regulations (e.g., healthcare agencies must meet CQC standards)
7. Business Insurance
Essential policies include:
- Professional indemnity insurance
- Public liability insurance
- Employers’ liability insurance (if hiring staff internally)
8. Costs of Setting Up an Employment Agency
Startup costs vary but typically include:
- Business registration: From £12 (limited company)
- Website and software: £500–£5,000
- Office space (optional): £200–£800 per month
- Marketing and branding: £500+
- Recruitment software and job board access: £50–£300 per month
9. Recruitment Software and Tools
Invest in tools to streamline operations:
- Applicant tracking systems (e.g., Bullhorn, Zoho Recruit)
- Job board subscriptions (Indeed, Reed, Totaljobs)
- CRM software for client management
- Payroll and invoicing tools
10. Building a Candidate Database
- Advertise roles on job boards and social media
- Use LinkedIn for networking and headhunting
- Partner with training providers and universities
- Keep records compliant with GDPR
11. Finding Clients for Your Agency
- Cold calling and emailing local businesses
- Networking at industry events
- Offering free recruitment consultations
- Building an online presence with SEO and LinkedIn marketing
12. How Employment Agencies Make Money
- Permanent placements: Charge a percentage of the candidate’s annual salary (often 10–30%)
- Temporary staffing: Earn money by charging clients an hourly rate higher than workers’ pay
- Contract staffing: Take a margin on fixed-term contracts
13. Challenges of Running an Employment Agency
- High competition in the recruitment industry
- Candidate shortages in certain sectors
- Maintaining compliance with complex regulations
- Building trust with both clients and candidates
14. Tips for Success
- Specialise in a niche to stand out
- Build long-term relationships with clients
- Invest in marketing and brand reputation
- Provide excellent candidate experiences
- Keep up with industry trends and laws
Frequently Asked Questions
Do I need a licence to start an employment agency UK?
Not usually, but certain sectors like healthcare require compliance with specific regulations.
How much does it cost to set up an employment agency?
Costs range from £2,000 to £10,000 depending on office space, marketing, and software needs.
Can I run an employment agency from home?
Yes, many agencies start from home with remote operations and digital tools.
How do agencies get paid?
Through placement fees, commissions, or charging clients for temporary staff.
Do I need recruitment experience to start an agency?
Not required, but experience in HR, recruitment, or business development is highly beneficial.
How long does it take to set up?
You can register your agency within a few days, but building a client base may take several months.
Conclusion
Setting up an employment agency in the UK can be rewarding if you follow the right steps. From registering your business and complying with regulations to building a client base and investing in recruitment software, preparation is key. By focusing on quality service and building trust, your agency can thrive in a competitive industry.