Recruitment agency fees in NZ: how agencies charge and what you actually get

Almost every recruitment fee in New Zealand falls into one of three models. The model matters as much as the percentage, because it changes what the agency commits to and when you pay.

1. Contingent (success fee)

You pay only if you hire a candidate the agency introduced. The fee is usually a percentage of the first-year base salary, invoiced when the candidate accepts or starts. Nothing to pay if the role is filled another way.

This is the most common model for mid-level permanent roles. Its weakness is that the agency carries all the risk, so it may spread its effort across many roles and only work hard on the ones most likely to close. If several agencies are working the same role, each has less incentive to invest.

2. Retained (or exclusive) search

You pay in stages, typically a third at the start, a third at shortlist and the balance on placement. In return the agency works the role exclusively and commits to a defined process: market mapping, approaching passive candidates, structured interviews and reference checks.

Retained search is standard for executive, general manager and hard-to-fill technical leadership roles. Some agencies offer a lighter "exclusive contingent" arrangement where you commit to one agency for a set period but still pay only on success.

3. Fixed fee or hourly

A set price for a defined scope, or an hourly rate. This suits project-style work such as recruitment strategy and role design, salary benchmarking and performance reviews, or unbundled services like advertising and screening only. Contract recruitment is different again: the agency usually charges a margin on the contractor's hourly rate rather than a placement fee.

These are market norms we see across New Zealand, not a price list. Every agency sets its own rates, and the right number depends on the role, the model and how much of the process the agency owns.

Engagement	Common range	Notes
Permanent, contingent	Commonly 12 to 20% of base salary	Lower end for junior and high-volume roles, higher for specialist and senior roles
Permanent, retained or executive	Often 20 to 30% of total package	Paid in stages; includes market mapping and passive-candidate search
Contract or interim	Margin on the hourly charge rate	Agency usually employs or pays the contractor; margin covers payroll, ACC, holiday pay and insurance
Unbundled services	Fixed or hourly	Advertising, screening, psychometrics, salary benchmarking

Two things move a fee inside those ranges. The first is scarcity: a Maintenance Engineer with dairy-plant experience or a Supply Chain Manager who has run a Waikato distribution network is harder to find than a generalist administrator, and the search costs more. The second is scope: an agency that runs the whole process, from role design to onboarding and a post-placement check-in, is doing more than one that forwards CVs.

Some agencies quote a percentage of total remuneration (base plus vehicle, bonus and KiwiSaver contributions) rather than base salary. Always ask which figure the percentage applies to. On a $130,000 package the difference can be several thousand dollars.

A recruitment fee is paying for a process, not a CV. Before you compare percentages, confirm what each agency actually delivers for the money. At minimum, a proper permanent placement should cover:

• A real briefing. Not a 15-minute call. Someone should sit with you, understand the team, question the scope and test whether the salary matches the market. We have written about why taking a brief without challenging it leads to mis-hires.
• Advertising and search. Job board costs are normally absorbed by the agency. For specialist roles the fee should also cover direct approaches to people who are not applying anywhere.
• Screening and interviewing. Phone screens, face-to-face or video interviews, and a written summary of each shortlisted person, not just a forwarded CV.
• Reference and background checks. Verbal references with named referees, plus qualification, right-to-work and any role-specific checks.
• Offer management. Salary negotiation, counter-offer handling and keeping the candidate warm through the notice period.
• Post-placement follow-up. A check-in with both parties once the person has started. This is where problems get caught early.

Things that are often extra: psychometric assessments, ministry of justice or credit checks through third-party providers, relocation support and any travel outside the agency's normal area. Ask for these to be itemised.

Most NZ agencies offer some form of guarantee if a permanent placement does not work out. The two common versions are:

• Free replacement. If the person leaves or is dismissed within the guarantee period, the agency re-runs the search at no additional fee. Periods of three to six months are typical, with longer periods on retained searches.
• Sliding rebate. A partial refund that reduces the longer the person stays, for example 100% in month one, 50% in month two, 25% in month three.

Read the conditions. Guarantees are usually void if the role changed materially, the business restructured, the fee was paid late, or the person was let go for reasons unrelated to suitability. A replacement guarantee is only as useful as the agency's willingness to honour it, which is a good reason to ask their existing clients how it has played out in practice.

Comparing agencies on percentage alone is how businesses end up paying twice: once for the cheap search that produced nobody, and again for the one that worked. A better approach:

1. Compare like with like. Base salary or total package? Contingent or retained? A 15% contingent fee with no search and a 20% retained fee with full market mapping are different products.
2. Ask about the process in detail. Who does the work? How many roles is that consultant carrying? What happens if the first shortlist misses?
3. Ask about specialisation. A recruiter who places operations and manufacturing leaders every month already knows who is good, who is available and what they earn. A generalist starts from scratch on your dollar.
4. Check the guarantee terms in writing. Length, conditions and whether it is a replacement or a rebate.
5. Look at the cost of the alternative. A senior role sitting empty for three months costs more in lost output and leadership time than most fees. Our article on the hidden cost of DIY hiring walks through this.
6. Get the terms of business before the first CV. Once you have interviewed someone introduced by an agency, you have generally accepted their terms, including any ownership period on candidates.

Most agency terms are reasonable, but a few clauses catch employers out:

• Candidate ownership periods. If an agency introduces a candidate and you hire them within a set period (often six to twelve months), even through another channel, the fee is payable. Keep a record of who introduced whom.
• Fees on internal referrals. Some terms claim a fee if a candidate they sent later applies directly. Clarify how duplicates are handled.
• Payment timing. Fees invoiced on acceptance rather than start date mean you may pay before the person walks in the door. Ask.
• Salary uplifts. If the package changes after the offer, some agencies re-invoice on the higher figure.
• Multi-agency roles. If you brief three agencies, expect three sets of terms and three claims on the same candidates. One well-briefed specialist is usually cheaper and faster.

Sometimes no. For a straightforward role with a healthy applicant pool, advertising it yourself is sensible. The maths changes for specialist and leadership roles, where the strongest candidates are employed, not applying, and where a mis-hire costs a small business far more than a fee. We cover that calculation in the cost of a bad hire.

The useful question is not "what does the agency charge?" but "what is this vacancy costing us each month, and what is the risk if we get it wrong?" When the answer to either is large, a proper search pays for itself. If you want a straight conversation about which model fits a role you are hiring for, talk to us. We will tell you if you do not need us.