Payroll vs temp agency: what's the difference for employers?

You need temporary staff. Two options keep coming up: a temp agency or payroll. Both take administration off your hands, and both make sure that someone else is the legal employer. But the differences? Bigger than you think.

Let's compare payroll and temporary agency work. When do you choose which one? And which option fits your situation?

The core difference in one sentence

With a temp agency, they decide who comes to work. With payroll, you decide that yourself.

Sounds simple. But this one difference has major consequences for how you work, what you pay and who carries your risks.

Recruitment and selection

Temp agency: The agency looks for candidates, holds interviews, makes a selection and sends someone to you. You can indicate what you're looking for, but the temp worker is their candidate. Not a good fit? Then they send someone else.

Payroll: You recruit yourself. You post the vacancy, hold the interviews, choose the candidate. Then you hand that person over to the payroll company, which takes them on. The payroll company handles the contracts and administration, but the selection? That was your work.

So this is a fundamental difference.

Do you want control over who works for you? Then payroll is the logical choice. Have no time for recruitment and want someone on the shop floor fast? Then a temp agency is the answer.

Exclusivity

Temp agency: A temp worker can work for several clients. Today with you, tomorrow somewhere else. The temp agency schedules them wherever they're needed.

Payroll: The employee works exclusively for you. Legally, they're on the payroll company's books, but in practice they're your employee. They won't simply end up working somewhere else.

The costs compared

Cost is often the deciding factor. Let's be honest.

Temp agency: Temp agencies work with a coefficient of 1.8 to 2.2. That factor includes: gross salary, social security contributions, holiday pay, administration, a risk margin and a recruitment margin. That recruitment margin? It's the fee for finding and selecting candidates.

Payroll: Payroll companies apply a factor of 1.65 to 1.82. Lower, because it includes no recruitment margin. That makes sense, since you found the candidate yourself.

Worked example:

	Temp agency	Payroll
Gross salary	€15/hour	€15/hour
Factor	2.0	1.75
Cost to you	€30/hour	€26.25/hour
Difference		-12.5%

Over a full year, this quickly adds up to thousands of euros per employee. In our experience (with thousands of temporary employees), we see that for many employers this is what tips the balance. Want a complete overview of all the pros and cons? Read our article on the pros and cons of payroll.

Replacement in case of illness

There's an important difference here. And honestly? This is something many employers don't think about.

Temp agency: Is the temp worker ill? Then you can ask the agency for a replacement. They send another worker. You never have to be left without staff (provided there are workers available).

Payroll: Is your payroll employee ill? Then you arrange the replacement yourself. The payroll company pays the guaranteed salary (the pay owed during illness) and handles the administration, but they don't send anyone else.

So there's a trade-off to make. Payroll is cheaper, but you carry the operational risk in case of illness yourself.

Working conditions

Temp agency: Temp workers fall under JC 322 (temporary agency work), supplemented by the collective labour agreement (CLA) of your sector for pay and working conditions. Specific rules apply to successive contracts and to the inflow procedure.

Payroll: Payroll employees have the same working conditions as your permanent staff. They fall entirely under your Joint Committee. No agency CLA in between. You can read more about this in our article on which CLA applies with payroll.

For the employee, this makes a difference. With payroll, there's more equality with colleagues in permanent employment.

Flexibility and duration

Temp agency: Temporary agency work is intended for temporary situations: replacement, peak periods, exceptional work, inflow. Legal maximums apply (often around 12 months for the same reason).

Payroll: Payroll has no legal maximum duration. You can work with the same payroll employee for years. This makes it more suitable for longer collaborations where you still don't want to offer a permanent contract.

Handy for those in-between situations.

When do you choose a temp agency?

A temp agency is the better choice when:

• You have no time for recruitment and selection
• You need someone fast (call today, someone on the floor tomorrow)
• You want a replacement in case of illness
• You need staff for short, unpredictable periods
• You don't yet know what type of employee you're looking for
• You'd rather pay for convenience

When do you choose payroll?

Payroll is the better choice when:

• You want to decide yourself who comes to work
• You already have a candidate (or can recruit one yourself)
• You want to keep costs down
• You need someone for a longer period
• You're looking for an alternative to a traditional contract

The hybrid approach

Many employers combine the two. They use a temp agency for fast, short-term assignments and payroll for employees who stay longer.

A common scenario? Someone starts through the temp agency (they did the recruiting), and after the inflow period the same person moves over to payroll (lower costs). This is possible, provided you discuss it in advance with the temp agency.

At Recruit, we often see this combination. Employers start with agency work for the recruitment, then switch to payroll once they know that someone is a good fit.

Legal differences in Belgium

Both arrangements are legally regulated in Belgium, but in different ways.

Temporary agency work: Governed by the Act of 24 July 1987. Only permitted for specific reasons (replacement, temporary increase in work, exceptional work, inflow). Temp agencies must be licensed.

Payroll: Falls under the ordinary employment contracts act. No specific reasons required. The payroll company does, however, have to meet all employer obligations. Every single one.

Want to know more about the legal rules around temp contracts? Read our article on temp contracts in Belgium.

The decision in 4 questions

Answer these questions to work out what fits you:

Do you already have a candidate in mind? Yes → payroll | No → temp agency

How long do you need someone? Short (days/weeks) → temp agency | Longer (months/years) → payroll

Is replacement in case of illness crucial? Yes → temp agency | No → payroll

Do you have a budget for recruitment? Yes → payroll (cheaper in the long run) | No → temp agency (all-inclusive)

In short

Payroll and temporary agency work look alike. The differences are in the details.

With payroll, you recruit yourself and pay less, but you also arrange replacement yourself. With a temp agency, you pay more, but you get recruitment and a replacement guarantee thrown in.

There's no single best choice. Only the choice that fits your situation, your budget and your way of working.

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How Recruit helps you with this

Want to recruit yourself but not deal with the administration? That's what Recruit is for.

With Recruit:

• Contracts in under 60 seconds: create trial and temp contracts without hassle
• Automatic payroll calculation: correct pay in line with current legislation and your Joint Committee
• Dimona (immediate employment declaration) and social documents: we handle all declarations, you focus on your business
• 24/7 personal support: always a dedicated contact who knows your company
• No fixed monthly costs: pay only for what you use

Try Recruit or get in touch with our HR experts for tailored advice.

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Frequently asked questions

Is payroll always cheaper than a temp agency?

Usually it is, because you don't pay a recruitment margin. The difference? Usually between 10 and 20%, depending on the sector and the volume.

Can I switch from a temp agency to payroll?

Yes, this is often possible after the inflow period. Discuss it in advance with the temp agency. Note: a takeover fee may apply.

Who arranges replacement in case of illness?

With payroll, you arrange this yourself. With a temp agency, you can ask them to send a replacement.

Which option is better for a long-term collaboration?

Payroll. There are no legal maximums on the duration, and the costs are lower in the long run.

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The information in this article is purely informative and does not replace professional legal or accounting advice. Employment legislation changes regularly. Always consult the current legislation or contact an HR expert for advice tailored to your situation.