They get 20% of one years salary as commission? Wow, I'm in the wrong business.
Why would a company even need a recruitment agency? When you employ more than 5 new people in a year, it would pay off to just employ your own HR-person, if you don't already, since someone needs to manage the HR stuff anyways if you employ so many people.
And if it's under that, it's already not that big of a task, and you probably won't have the budget for such an expensive service.
Maybe it's the fastest way to find senior staff, as they're not actively looking for new jobs?