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Carolyn Moir-Grant
With over 30 years of experience at Allstaff, Carolyn has been a guiding force in shaping the agency’s reputation as a trusted recruitment partner.
Agency mark-up on warehouse workers is visible on every invoice – which is exactly why it gets scrutinised, while the true cost of recruiting in-house rarely gets added up in one place. This article lays out both sides honestly: what agency charge rates actually include, what in-house hiring really costs once every budget line is accounted for, and a simple way to work out your own break-even point.
Agency mark-up is easy to see and easy to question – it’s a line on an invoice, calculated as a clear percentage on top of an hourly rate. The cost of recruiting warehouse workers yourself is just as real, but it’s scattered across job board fees, HR time, onboarding admin, and the quiet cost of a shift that doesn’t get filled – so it rarely gets challenged with the same rigour. We think that’s the wrong comparison to make, and it’s one we’re happy to be tested on. Here’s both sides set out clearly, so you can make the call with real numbers rather than a gut feeling about what mark-up “should” look like.
An agency’s charge rate is built on top of the base pay rate, and most of what sits inside that mark-up is statutory, not discretionary. It’s worth walking through what a genuinely compliant hourly rate already costs before any agency margin, payroll admin, insurance, or replacement cover is even added.
Take the National Living Wage for workers aged 21 and over, which rose to £12.71 an hour from April 2026. On top of that base rate, a compliant employer is also carrying:
Taken together, based on a standard 40-hour week at £12.71 an hour, the fully compliant hourly cost of employing a warehouse operative on the National Living Wage – before any agency margin, employer’s liability insurance, payroll administration, PPE considerations or same-day replacement cover for a no-show are even added – comes to £16.58 an hour. We think it’s worth an employer seeing that build-up in full, because a charge rate that looks high in isolation often looks very different once you can see what’s already inside it before margin is even applied.
We won’t publish our own margin here – every client’s volume, shift pattern, and role mix genuinely changes it, and a single published percentage would tell you less than an honest conversation about your specific site would. But we will walk any employer through exactly what’s included in a quoted rate, line by line, before they commit to anything.
This is where the comparison usually breaks down, because most of this cost never appears as a single number anywhere.
Job board advertising for warehouse roles adds up fast when you’re running multiple vacancies through the year, and that’s before internal recruiter or HR time spent screening applications, arranging interviews, and chasing no-shows on interview day is counted at all. Then there’s the part that’s easy to underestimate entirely: building the kind of reach an agency already has. We currently have over 500 temps working weekly, with regular, ongoing communication that means new roles get shared directly with people already known to us – including passive candidates who aren’t actively browsing job boards at all. An in-house team starting from nothing has to build that network from a standing start, one hire at a time.
Compliance is the other cost that’s easy to miss until it goes wrong. Right-to-work checks, payroll processing, and the ongoing administrative burden of managing a temporary workforce compliantly are substantial enough that we run our own dedicated support services team and in-house payroll specifically to carry that load for clients. Employers recruiting direct have to build or buy that capability themselves, and it rarely shows up as a distinct line item until an audit or a compliance issue forces the question.
There’s a pattern we see often enough to be confident it’s not a coincidence: employers try building their own temp bank, run into frustration with starters and leavers and the sheer administrative and training burden that creates, and come back to an established agency because the in-house version turned out to cost more – in time, not just money – than they expected.
There’s no single right answer here, because it depends entirely on your volume, your turnover rate, and how much internal capacity you already have. But a simple framework helps:
No – and we wouldn’t claim otherwise. For low-volume, predictable, permanent hiring, building in-house capability can genuinely make sense. But the comparison is rarely as simple as looking at a mark-up percentage and deciding it looks expensive. Once job board spend, recruiter time, compliance admin, and the real cost of an unfilled shift are counted honestly, the gap between the two options is usually smaller — and sometimes reversed — from what the invoice alone suggests.
We’re happy to walk through exactly what’s included in a quoted rate, line by line, and help you work out where your own break-even point actually sits. If you’re weighing up agency against in-house for an upcoming warehouse hiring need, [get in touch with our Warehouse & Logistics team] and we’ll talk it through honestly – including telling you if in-house is genuinely the better call for your situation.
Is it always cheaper to recruit warehouse staff directly rather than through an agency? Not necessarily. It depends on volume, turnover, and how much internal HR capacity you already have. Low-volume, predictable hiring can favour in-house; frequent or hard-to-fill roles usually favour an agency with an existing pipeline.
What’s included in an agency’s charge rate for warehouse workers? Typically the base pay rate plus statutory additions — employer National Insurance, pension contributions, the Apprenticeship Levy, holiday pay accrual, and SSP provision – alongside payroll administration, insurance, compliance management, and the agency’s margin. Ask any agency for a full, itemised breakdown before appointing them.
What hidden costs do employers usually miss when calculating in-house recruitment? Job board fees, the real value of internal staff time spent on screening and interviewing, onboarding and compliance administration, and the cost of a shift or role that sits unfilled while recruitment continues.
How much does statutory pay actually add to the National Living Wage? For a worker on the National Living Wage in 2026/27, statutory additions – holiday accrual, employer National Insurance, pension contributions, the Apprenticeship Levy, and SSP provision — bring the underlying compliant cost of a 40-hour week to £16.58 an hour, before any agency margin, insurance, or admin cost is applied.