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Labour economics · 1 MIN READ

Temporary assignment versus permanent staff: when does agency employment pay off?

Many managers face a dilemma: build a large permanent workforce, or rely on the temporary assignment of workers? The answer is not which model is universally better, but how well a company can manage flexibility at a time of uncertain order books.

In periods of falling orders, fixed personnel costs become a heavy burden. The temporary assignment of workers (agency employment) turns fixed personnel expenses into variable ones.

When temporary assignment makes the most sense

  • Seasonal peaks and one-off projects: During campaigns you need an immediate 20 to 50 % increase in capacity without having to make people redundant once the project ends.
  • New production lines and test phases: When a new line is being launched, long-term utilisation is uncertain. Temporary assignment lets you test the operation without oversizing your permanent headcount.
  • Strict internal headcount limits: Parent corporations often cap the number of their own employees, while external capacity falls under operating expenses (OPEX).

Key advantages for finance and production

  • You pay only for hours actually worked: Only real output based on attendance is invoiced. Sick leave, care leave and idle time do not burden the client's payroll budget.
  • No severance pay on the client's side when production drops: When the order ends, the assignment ends on the agreed terms. Notice periods and severance are handled by the agency as the employer of the assigned workers.
  • The option of taking people on later (Try & Hire): Test a capable operator in practice and, once vetted, take them onto your own payroll on the agreed terms.