Demystifying Staffing Agency Hourly Bill Rates:
What You're Really Paying For
When it comes to staffing agency bill rates, there are still myths and misunderstandings swirling around. Let’s pull back the curtain and explore what actually goes into the hourly rate you’re billed for assignment employees working at your facility.
What Makes Up a Staffing Agency’s Hourly Bill Rate?
Myth #1: “It’s cheaper for me to pay the temporary worker myself.”
Reality: The hourly rate billed by a staffing agency includes more than just the employee’s wage. If you hired the worker directly, you’d be responsible for all the same costs, and possibly more.
Here’s what’s typically included:
- Employee Pay Rate
- Mandatory Government Payroll Remittances**
(e.g., Employment Insurance, Canada Pension Plan, Provincial Health Tax, Vacation Pay) - Payroll Administration Costs
(e.g., weekly payroll processing, direct deposits, T4s, ROEs) - Servicing Costs
(e.g., advertising, screening, compliance, onboarding, insurance, workers’ compensation) - Agency Profit Margin
** If your agency is providing a bill rate that is very close to the associate’s pay rate, they may be paying people “off the books”, or even as independent contractors, instead of on their Social Insurance Numbers as regular employees, so as to avoid the added cost of government remittances. There are very specific requirements for a position to qualify as suitable for independent contractors. Misclassifying positions to avoid paying hourly workers appropriately will put your business, the associate, and the agency under Canada Revenue Service’s
microscope. Learn more here about which roles can qualify for independent contractor work.
So, why use a staffing agency?
- Efficiency & Flexibility:
Save internal time and resources, especially with seasonal or fluctuating staffing needs. - Expert Recruitment & Onboarding:
Agencies maintain a skilled roster and handle compliance, training, mentoring, and payrolling. - Financial Advantage:
Temporary staff are not part of your fixed overhead, something lenders and investors appreciate.
Myth #2: “Staffing Companies Deduct Money From Employees’ Pay.”
Reality: Reputable staffing agencies do not deduct service fees from employees’ wages.
If a job is advertised at $22/hour, the employee earns that PLUS vacation pay and statutory holiday pay, before standard government deductions like:
- Employment Insurance
- Canada Pension Plan
- Income Tax
Any other deductions (e.g., uniforms, police checks) must be authorized by the employee in writing.
Staffing agencies act as the legal employer, and their recruitment services are free to candidates.
Understanding the true cost structure behind staffing agency bill rates helps you make informed decisions, and dispels myths that can cloud judgment. Partnering with a reputable agency offers strategic advantages that go beyond just filling a role.
