Buy-Outs and the Frontline Difference
A Brief Overview of Temp-Hire
Most staffing agencies utilize a temporary-hire contract. That is to say, they work with companies to offer talented employees for a short period of time. The employee used by the company is not directly hired by that company but instead is an asset of the staffing agency they were hired from. Any pay received by said employee is paid out via the staffing agency and then invoiced to the hiring company.
The length of the contract varies. Oftentimes it can be as short as 30 days or as long as 18 months. The short-term nature of these contracts makes them perfect for one-off projects where an extra hand is needed. They are also great for filling in workforce gaps when you are looking for more permanent candidates. In this case, you may find that your temporary hire is actually a good fit for the position and would like to hire them full-time. If this occurs, you may be wondering how you can get the temp-hire to move from the staffing agency to working with your company full-time. The answer is a buy-out.
Buying-Out a Contract
Almost every staffing agency offers a buy-out plan. Using a buy-out plan, a company can pay a fee to end the contract with the staffing agency for a specific employee. That employee then is able to come and work for the company full time.
A buy-out fee exists because of the loss the staffing agency takes. Companies are invoiced not just for the salary paid to the temporary employee but also a fee, ranging from 25% to 100% of the employee’s salary. So, if an employee earns $20 per hour, the company they are contracted to will pay the staffing agency $25-$40 per hour that employee works. So, the buy-out fee helps to negate the $5-$20 per hour loss, the Staffing Agency will face upon losing that employee. The average buy-out cost charged by staffing agencies is 25% of the employee’s first-year salary.
The Frontline Difference
At Frontline, we offer something unique to the industry. Most staffing agencies will offer the same buy-out rate no matter how much time the employee has been contracted to work with you. Be it three months, six months, or nine months into a contract, your buy-out fee will always be the same. The same thing cannot be said about Frontline Staffing Group.
At Frontline Staffing Group, we offer what we call a diminishing buy-out plan. This means that the cost for you to buy-out an employee’s contract diminishes every 30 days after the employee has been working under contract for 90 days. Eventually, there would be no cost to buy-out the contract. In addition, our buy-out plans start at only 20% of the employee’s first-year salary. This means from beginning to end, your company saves with Frontline Staffing Group!