The difference between a Labour Broker and a Recruitment Agency | Articles | Umkhonto Labour Holdings

There is a vast difference between a recruitment agency and a labour broker. While both sectors source candidates to fill a particular role within an organisation, a labour broker handles the interviews, recruitment, HR, discipline, admin, payroll, PPE, transport, ensuring all legislative requirements are met, etc. The recruitment agency’s job is to source the candidates and place them on a site. Unless the agency places temporary staff on a site, they are not responsible for any of the other functions a labour broker performs.

A personnel recruitment agency is a company that purposely sources individuals to fill specific positions within an organisation. There are two types of recruitment agencies, namely those that specialise in a particular industry those that fill any position within a company. The same applies for labour brokers.

Types of speciality recruitment agencies include HR recruitment agencies, executive recruitment agencies, IT recruitment agencies, advertising recruitment agencies, accounting recruitment agencies, and so forth.

Labour brokers can specialise in the supplying temporary workers to any of the above industries as well as mining, transport, logistics, building, etc.

There are a number of reasons why organisations use a recruitment agency. These include, but are not limited to the fact that the agency has an existing database; it covers the cost of advertising; it has the manpower to go through all the CV’s, take calls, conduct interviews, perform reference and checks, short list the candidates and then send only those on the shortlist to the client.

Reasons why companies use labour brokers is because companies can gain access to resources that are not available internally; they can keep a headcount to a minimum; they can now reduce and control operating expenditure; the employee risk is transferred; the burden of sourcing, screening and employing workers is removed as a flexible staffing solution with the right set is provided; the labour broker imports greater efficiency at a lower cost, thereby enhancing competitive capabilities; companies no longer have to carry the threat or cost associated with permanently employing staff, the risks associated with unfair dismissal or other labour disputes as a consequence of the ever changing labour legislation.

In addition, there are no recruitment, advertising or administration costs or time spent selecting potential staff members; employee’s salaries and wages are paid, statutory obligations and pay queries are attended to; the burden of dealing with union meetings and demands, wage negotiations, strikes, unfair dismissal cases and CCMA disputes are removed; companies no longer have the costs associated with labour consultants or attorney fees; all staff members are employed by the broker, and therefore cannot claim unfair dismissal from the company; and the labour broker is always updated on the latest developments and changes in the labour environment and have the resources to keep abreast of the changes in the legislation and regulations set out by government.

While some recruitment agencies perform this function for its clients, other companies prefer to hire an internal recruiter who typically works in the Human Resources (HR) department. In the past, this person was known as a personnel officer.

Internal recruiters may be multi-functional, serving in an HR generalist role. This includes advertising for a position where there may be a vacancy – whether online or through newspapers, negotiating, interviewing, staff recruitment, firing, conducting exit interview as well as managing employee disputes, contracts, benefits or is hired in a specific role that only focuses on recruiting staff member.

The internal recruiter can either be permanently employed or hired on a contract basis. Contract recruiters tend to move around between multiple companies, working at each one for a short stint as needed for specific hiring purposes. The responsibility is to filter candidates as per the requirements of each client.

Once this is done, the client can interview the candidates that have been shortlisted, and if satisfied with the person, offer the person position within the organisation. Should the candidate not fit the clients’ criteria, then the agency will start the process all over again until they find a person that will fit into the company.

Some recruitment agencies and labour brokers offer the service of conducting the necessary tests and checks on behalf of its clients. By offering this solution, the client has one less thing to worry about.

The bottom line is that it is cheaper for a company to outsource is labour requirements, than employ people internally. Not only will the organisation save money on the additional manpower, but it will also reduce its expenditure with the costs associated with hiring a person to perform these functions.