Temp-to-Hire Conversion Fees: How They Work

Temp-to-Hire Conversion Fees Explained

Updated November 6, 2026

What Is a Staffing Agency Conversion Fee?

A conversion fee is what a company pays an agency to hire a temporary worker directly before an agreed period ends. Many agreements reduce the fee as hours accumulate and waive it after a set point, often around 520 hours (rule of thumb). Read this clause before the assignment starts, because it is easier to negotiate then.

Updated November 6, 2026 · Source: manpower.broker staffing guide; rules of thumb, so confirm terms in the written agreement.

Agencies spend money to find a worker and recover it through hours billed. Hire that worker early and they lose that income, so the agreement usually sets a fee.

Common Structures

Sliding scale: the fee falls as hours are worked.
Free after a set period: no fee after an agreed number of hours or weeks.
Flat percentage: a share of the worker's starting annual pay.

What to Negotiate

The hour count after which conversion is free
Whether the fee is based on base pay only
How the clause applies if the worker leaves and returns
Whether a referral from your own staff counts

Do the Math

Compare the fee with paying the markup for the remaining weeks. Sometimes paying the fee is cheaper. The calculator helps you test this.

For Workers

A conversion fee is a matter between the company and the agency. You should not be asked to pay it. If you are, read our scam warning signs.

Find Staffing Agencies Near You