Labour Supply Agency Costs UK
What do construction labour agencies actually charge? A transparent breakdown of markup percentages, on-costs, hidden fees to avoid — and how to compare agency rates fairly.
Written by
Ricky Cohen— Founder & MD, Phoenix Gray Recruitment · 15+ years in UK construction recruitmentQuick Answer
UK construction labour agencies typically charge a markup of 18–30% on top of the worker's gross pay rate. For a CSCS labourer earning £140/day, expect an all-in charge rate of £165–210/day. The markup covers employer NI (13.8%), holiday pay (12.07%), insurance, compliance administration, payroll costs, and the agency's margin. CIS workers attract lower on-costs than PAYE. Permanent placement fees are typically 12–18% of first-year salary.
Typical Agency Charge Rates by Role
The table below shows typical worker pay rates versus agency charge rates (what you pay the agency) for common construction roles in the UK. London rates are 10–20% higher. Rates vary by volume, contract terms, and payment method.
| Role | Worker's Pay Rate | Agency Charge Rate | Typical Markup | Payment Method |
|---|---|---|---|---|
| CSCS Labourer | £130–160/day | £160–220/day | 18–25% | PAYE or CIS |
| Groundworker | £150–190/day | £185–250/day | 18–25% | PAYE or CIS |
| Bricklayer | £160–220/day | £200–280/day | 18–28% | CIS typically |
| Carpenter / Joiner | £160–210/day | £200–270/day | 18–28% | CIS typically |
| Electrician (JIB) | £180–240/day | £225–310/day | 20–30% | PAYE or Umbrella |
| Plant Operator | £170–230/day | £210–295/day | 18–28% | CIS typically |
| Site Manager | £250–380/day | £300–460/day | 18–22% | PAYE or Ltd Co |
| Quantity Surveyor | £280–420/day | £340–510/day | 18–22% | PAYE or Ltd Co |
All rates are indicative national averages for 2025/26. London adds 10–20%. High-volume clients may negotiate lower markups. Permanent placement fees are calculated separately.
What's Included in the Agency Markup?
A reputable agency's charge rate is not just worker pay plus profit. Here is every cost included in the markup — and why each is necessary.
Employer's National Insurance
PAYE workers only. Not applicable to CIS self-employed.
Holiday Pay
PAYE and some umbrella workers. Accrued for all PAYE temp workers.
Apprenticeship Levy
Applies to agencies with payroll > £3m/year. Passed on in charge rate.
Employer Liability Insurance
Required for all PAYE workers on site.
Public Liability Insurance
Standard industry requirement. Included in all reputable agencies' rates.
Compliance & admin
Right-to-work checks, CSCS verification, reference checking, payroll.
Agency margin
The agency's profit after all on-costs. Variable by volume and contract.
The real net margin is smaller than you think
After paying employer NI (13.8%), holiday pay (12.07%), insurance, compliance costs, and payroll admin — an agency's net margin on a typical PAYE worker is often only 5–10% of the charge rate. The headline markup percentage is therefore a misleading number to focus on. What matters is the all-in charge rate you pay per day, and the compliance quality you receive in return.
PAYE vs CIS: How Payment Method Affects Agency Cost
The payment method used for the worker significantly affects the agency's on-costs — and therefore your charge rate. Understanding the difference helps you compare agency quotes accurately.
PAYE Workers
- Employer NI at 13.8% added to charge rate
- Holiday pay accrual at 12.07%
- Agency handles all PAYE tax and NI for worker
- Lower IR35 risk for client
- Higher charge rate than CIS equivalent
Best for: high-volume labour, housebuilders, sites requiring employment law protections.
CIS Self-Employed
- No employer NI — significantly lower on-cost
- No holiday pay accrual
- Agency deducts CIS tax (20% or 30%) at source
- Worker must be genuinely self-employed — IR35 risk if not
- Agency must verify CIS registration with HMRC
Best for: skilled trades (bricklayers, groundworkers, carpenters) with verified self-employment status.
Important: Some agencies offer artificially low CIS rates by mis-classifying PAYE workers as self-employed — creating IR35 liability for your business. Always ensure the agency provides evidence of CIS registration verification for each worker. See our full CIS vs PAYE guide →
Permanent Placement Fees
Permanent recruitment works differently — agencies charge a one-off fee based on the placed candidate's first-year salary. No ongoing margin or charge rate applies.
| Role Level | Typical Salary | Agency Fee % | Fee Range |
|---|---|---|---|
| CSCS Supervisor / Foreperson | £35,000–45,000 | 12–15% | £4,200–6,750 |
| Site Manager | £45,000–65,000 | 12–15% | £5,400–9,750 |
| Project Manager | £55,000–80,000 | 12–16% | £6,600–12,800 |
| Quantity Surveyor | £45,000–70,000 | 12–16% | £5,400–11,200 |
| Contracts Manager / Director | £70,000–120,000 | 15–18% | £10,500–21,600 |
Most agencies offer a rebate period of 8–12 weeks — if the placed candidate leaves within this window, a partial or full refund applies. Always check the rebate terms before signing.
Red Flags: Hidden Agency Fees to Watch For
Not all construction agencies are transparent. These are the hidden charges and practices that should prompt you to look elsewhere.
Registration or onboarding fees
Reputable agencies never charge clients to register. A fee to 'go on the approved supplier list' is a red flag.
PPE uplifts not disclosed upfront
Some agencies add £5–10/day per worker for PPE without disclosure. Ask for a written all-in rate card.
Cancellation charges for rejected workers
If you reject a worker before they start because they fail your induction, you should not be charged. Verify this in writing.
Temp-to-perm conversion fees
These are legitimate when disclosed — typically 8–12 weeks' margin buyout — but should be agreed upfront, not sprung on you.
Volume rebate promises
Promises of retrospective rebates at year-end are often not honoured. Negotiate the rate upfront instead.
IR35 workarounds
Agencies pushing unusual payment structures (offshore, loan arrangements) to inflate take-home pay are creating IR35 risk for your business.
Frequently Asked Questions
What percentage do construction labour agencies charge?
UK construction labour agencies typically charge a markup of 18–30% on top of the worker's gross pay rate. The actual percentage varies by discipline, volume, and payment method. CSCS labourers are at the lower end; specialist trades and M&E engineers attract higher margins.
What is included in a labour agency's charge rate?
The agency charge rate covers the worker's gross pay, plus employer's National Insurance (13.8%), holiday pay accrual (12.07%), Apprenticeship Levy (0.5%), employer liability and public liability insurance, compliance administration, payroll processing, and the agency's margin. PAYE workers attract higher on-costs than CIS contractors.
Do construction agencies charge for CIS workers?
If a worker is genuinely self-employed under CIS, the agency's on-costs are lower — no employer NI, holiday pay, or pension contribution. As a result, CIS day rates are lower than PAYE gross equivalents, but the agency margin may still be similar.
Are there hidden fees construction agencies charge?
Reputable agencies do not charge hidden fees. Watch for registration fees, PPE uplift fees not disclosed upfront, cancellation charges for workers you reject, or rebate clawbacks on permanent placement fees. Always ask for a full written rate card before agreeing to supply.
How much does it cost to hire a temporary CSCS labourer through an agency?
If a CSCS labourer's day rate is £130–160/day gross (PAYE), an agency typically charges £160–220/day all-in, depending on region and volume. London rates are higher. The all-in charge rate includes pay, employer NI, holiday pay, insurance, and agency margin.
What is a fair agency margin for construction recruitment?
A fair net margin for high-volume CSCS labour is 18–25% on payroll cost. For skilled trades expect 20–28%. For site management and professional roles on permanent placement, fees are typically 12–18% of first-year salary.
Get a Transparent Rate Card
Phoenix Gray provides a full written rate card with no hidden fees — PAYE and CIS rates, charge rates by discipline, and permanent placement fee structure. Call or submit a vacancy to discuss your requirement.