Temp-to-Hire
What temp-to-hire means, how a temp-to-hire position works from trial period to conversion, how conversion fees are set, and where agencies lose the fee.October 8, 2026
3 min read
Running an Agency
Written by the NextCrew team
Definition
Temp-to-hire is a staffing arrangement where a Crew Member starts on a client's job as the agency's temporary employee and the client can hire them permanently after a trial period. Until the conversion, the agency employs and pays the Crew Member and bills the client. At conversion, the Crew Member moves to the client's payroll and the agreement decides whether a conversion fee is owed.
How does a temp-to-hire position work?
Temp-to-hire runs in three stages, and the staffing agreement should set the rules for each one before the first day.
- 1Trial period
The Crew Member works on assignment as the agency's employee, often for around 90 days or a set number of hours. The agency handles pay, taxes and workers' comp.
- 2Decision
The client decides to hire, extend the trial or end the assignment. The Crew Member decides too: the job has to suit both sides.
- 3Conversion
The Crew Member joins the client's payroll. If the trial period was cut short, a conversion fee is usually owed under the agreement.
How is a temp-to-hire conversion fee calculated?
Most agreements tie the fee to how long the Crew Member has already worked through the agency. The longer the assignment, the more of the agency's cost has been recovered through the bill rate, so the fee steps down. Many agreements waive it entirely after a set number of hours.
| Hours worked before conversion | Illustrative fee | Why |
|---|---|---|
| Under 240 hours | Full fee, for example a percentage of first-year pay | The agency has recovered little of its recruiting cost |
| 240 to 520 hours | Reduced fee | Part of the cost has come back through the bill rate |
| Over 520 hours | No fee | The trial period has run its course |
The numbers above are illustrative. Agencies set their own schedule, and VMS programs often impose one. See conversion fee for how the schedule is written.
Where agencies lose the conversion fee
- No written schedule. If the fee isn't in the signed agreement, it is hard to collect after the client has already hired the person.
- Hours nobody can prove. The fee depends on hours worked, so the agency needs an accurate record by Crew Member and client.
- Quiet hires. A client hires a Crew Member a few weeks after the assignment ends. A good agreement covers a period after the assignment, not only during it.
- Temp-to-hire treated as temp. If recruiters don't flag the order as temp-to-hire, nobody tracks the trial period or the conversion date.
Bottom line: temp-to-hire only pays the agency when the agreement, the hours and the conversion date are all on record.
How NextCrew fits
Every job a Crew Member works sits on their record in NextCrew, by client, with the hours from approved timesheets. That job history can be exported for a client conversation or an invoice dispute, so the agency can show exactly how many hours were worked before the conversion. See the NextCrew ATS for how candidates move from application to placement.
Frequently asked questions
Related terms
- Conversion fee: what the client pays to hire before the trial ends.
- Direct hire: the client's payroll from day one.
- Placement fee: the fee on a direct hire placement.
- Staffing agreement: where the conversion terms are written.
- Fall-off: when a placement doesn't last.