June 24, 2022

Staffing agencies in the care sector: how to choose the right model for your business

Staffing agencies care sector

It is well documented that the care sector is struggling with significant challenges in recruitment and retention of staff. Whilst an effective staff retention strategy is a priority for many, some of the solutions are not quick-fixes and operators may need to continue to engage agency staff to plug the gaps.

As a result, it is useful to understand where the negative impacts of agency use can be mitigated. One of these ways is via the choice of contractual model.

A Master Vendor arrangement is where a sole recruitment agency has full responsibility for filling vacancies. If the Master Vendor cannot fill the vacancies then they are released to other competing agencies. Benefits of this model can include service and standard consistency, and close rapport and communication between the master vendor and client. This model can, however, have its limitations if there is a shortage of available staff.

A Neutral Vendor is typically an outsourcing organisation which forms partnerships with recruitment agencies. When a vacancy is required, it goes to market to find the most cost-effective and suitable requirement.  Benefits of this model can include a fully managed, 24-hour service, an increased choice of candidates, increased fulfilment and overhead reductions.

Whichever model is chosen, it is advisable to take professional advice in relation to both the procurement and negotiation of these contracts. Neutral vendor agreements, in particular, are often high value and complex and it is easy to overlook commercial and legal points which may have a material impact on the success of the contract at a later date.

On the legal front, particular attention should be given to the application of IR35/Off Payroll Rules and on whom the requirement falls for status determination.  Care should also be taken with exclusivity clauses to ensure that the organisation has options outside of the contract if the Neutral Vendor cannot source sufficient numbers of suitable candidates. Other key areas to scrutinise and negotiate include the application of the Agency Workers Regulations 2010, remedies for breaches (for example if the Neutral Vendor fails to pay the agencies), exit clauses and the payment of temporary to permanent fees.

Marr Procurement is the leading social care temp agency specialist and has worked with 51 care providers across the UK to find the most suitable Neutral Vendor partners. A specialist procurement company such as Marr, (which now sources over £400m per annum of temp agency spend), can assist in the analysis of the commercial model to ensure that whichever model is chosen is preferential in terms of risk and cost. They can provide vital tips on “lesson learned” during previous negotiations which can provide significant value in the procurement, negotiation and launch of the new arrangement. One of Marr’s 88 lessons learnt is how VAT is treated, given that such a cost cannot be reclaimed by most care providers.  Also, another critical lessons learnt includes the importance of dovetailing perm recruitment, retention, resourcing with bank optimisation and temp agency sourcing. Further, always be careful around new RPI-linked inflation clauses and whether or not the Neutral Vendor’s online timesheet system can be tailored so that your bank team are given first option on temp agency hours. The ‘prize’ must be to secure continuity of care by reducing the number of temp agency hours and increasing the number of perm staff.

In the words of Christoph Marr: “our tried and tested Agency solution provides much-needed savings, improved visibility, and the control you need to deliver continuity of care. Please get in touch to find out more about how we can help you.”

If you would like further advice or assistance with procuring agency agreements, please contact

Hazel Phillips of RWK Goodman

Christoph Marr of Marr Procurement on 07823 405 200 or [email protected]

We can help

We specialise in providing expert advice to care providers across a range of domains, including employment, corporate and regulation and dispute resolution.

Hazel Phillips RWK Goodman
Partner | Co - Head of Health & Social Care