Contract vs Permanent Job Rates and Agency Fees

Does anyone know...
I don't know how it works here, but I am also not sure about how it works in the US either...
When you get a permanent job through a recruiter/agency, the hiring company ends up paying them a big fee based off your yearly salary, or something like that... right?

Then how does it work for a contract/temp/hourly placement?  I did work like this briefly before, and the way it worked was that the recruiter/agency paid me X/hr and I suppose the company paid the recruiter/agency Y/hr, where Y is probably a bit more than X and that works as the recruiter's fee.   What I dont know is how much is (Y-X) and if there is discretionary wiggle room there, or is it more of a standard z% cut.   (When a company comes out with a job spec and a rate, would the agency then seek to fill it with the cheapest qualified candidate possible to save a higher fee, or would this really not be in the agency's best interest as less and less people would work with them eventually)

So basically, Question1, how are recruiter/agency fees derived for contract work?  And is it sort of the case that the employee ends up paying the fee in a way (as opposed to the permanent placement where you could argue the employee doesnt bare much of the fee cost)

And Question 2:   Do contract/temp jobs usually pay more, sometimes considerably, than permanent jobs, this being because they come without paid holidays, health and other benefits, bonuses, promotions/advancement, and other intangibles, etc.   All else equal, if the contract rate is equivalent to a permanent rate, then is it overall at a slight disadvantage?

Related to Q1,  if it is for a permanent job, the recruiter will be glad to negotiate a higher salary because that increases their fees as well,  but do they have the same incentive at all when it is for a contract role, (or do they have even the opposite incentive, to pay you less so that they can keep more?)

I was just wondering about it...

THANK YOU!

Let me do this backwards ...

q2 - yes often, but not always, temp jobs through agencies have a higher hourly rate because as a temp you are not entitled to sick pay or holiday pay from the company you are working for;

q1 - I think the commission rate varies but the agency fees are charged to the employer not the employee.

q1- as britwife says, the agency receives their fee from the employer, who is their client. So the employer might pay a total of £10/hour for your services, £3 of which goes to the agency, £7 of which goes to you. (oversimplification, but you get the idea)

Always remember that agencies do not work for you, they work for the employer!  The best agencies do actually care about their workers despite that fact, but some places just don't give a toss about their temps/contractors, unfortunately

Also, be careful of negotiating a direct hire with somewhere you're temping with- in those cases, the agency usually has the right to charge the employer several thousand pounds as a "finder's fee" unless several months have passed since you last worked for that employer.

q2- temp work here generally does come with paid holidays, but they are paid for by the agency, not the employer you're placed with.  you generally don't get paid for sick days.

I think whether temp/contract is a better salary than perm depends on the field and the level of work- an office temp doing secretarial work will probably make more money as a permanent employee, but an IT contractor may make significantly more from contracting than they would doing the same work if they were permanently employed.

q2- temp work here generally does come with paid holidays, but they are paid for by the agency, not the employer you're placed with.  you generally don't get paid for sick days.

I got paid for holiday time, which was accrued over time worked.  Some agencies even pay for bank holidays, though this does definitely vary (my agency didn't, but 1 of my temp employers was generous and did pay us!).  Actually, I want to say they have to to pay you for holiday, but I could be wrong?  Think it might fall under the statutory work minimums and such.

I always thought that holiday pay was required here too...I think there's a law that says you are entitled to have the equivalent of 20-something days off a year, even if you're an agency worker.  Can't be arsed to go look it up, though.  When I was a temp, I'm pretty sure I got paid for bank holidays (my agency was pretty damn awesome, though.)

Actually, I want to say they have to to pay you for holiday, but I could be wrong?  Think it might fall under the statutory work minimums and such.

I think you might be right about that. I seem to remember there was some ruling about that a couple of years ago that changed things (long time since I temped, obviously!)

http://www.acas.org.uk/CHttpHandler.ashx?id=964&p=0

This leaflet sets out the rights of agency workers & what the agency must & must not do. It confirms that they have to give you paid holidays and also that they cannot charge the employee any fees. There's a lot of other useful info there too. 

Would this thread be better served in the Jobs section?