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If your business is low on workers and struggling to keep up with demands, you may wish to engage a labour hire provider to find employees. If so, you will need to ensure that you understand your rights and responsibilities under your labour hire agreement. This article will run through some essential considerations if you are thinking of engaging a labour hire provider to fulfil your staffing needs.

What is a Labour Hire Arrangement?

Under a labour hire arrangement, businesses request a provider to supply them with workers. You will then pay the provider for supplying your business with workers. You will not be directly paying the worker or entering into any contract with the worker.

While labour hire is common in blue-collar work, there is no restriction in which industries can use labour hire services. Using labour hire services will allow for flexibility in your workforce.

By engaging a labour hire provider to supply you with a worker, you can:

  • outsource the work involved in finding a worker;
  • hire a worker only when you need them, including for short periods or one-off occasions; and
  • find workers with specific skills.

Labour hire may be ideal if your business is affected by fluctuations in demand. 

For example, if you work in the retail industry, you may quickly need more workers within the Christmas period

Choosing the Right Labour Hire Business

Labour hire businesses often specialise within particular industries, like retail or mining. When looking for a provider, you should ensure that they have expertise in your industry. This will provide peace of mind that they will understand your business’s needs.

When choosing a provider, consider whether:

  • they provide their workers with any training;
  • you require their workers to have a level of qualification or experience;
  • they completed checks on their workers regarding visas or prior employer references; and
  • you get to have a say in which worker you will obtain.

By doing your research on the labour hire provider first, you will be able to determine whether they have the appropriate workers for your business.

Are There Any Hidden Restrictions or Obligations?

When engaging employees through a labour hire company, you will need to enter into a labour hire agreement. This agreement ensures that the terms of your arrangement are clearly set out. 

You will need to ensure that you are aware of any: 

  • obligations that you have to the worker; and 
  • any restrictions on your business.

A common restriction in these agreements is to prevent you from directly engaging a worker. This could be problematic if you wish to use the labour hire agreement to find good employees that you might hire permanently in the future. Therefore, ensure to check and see whether these restrictions will apply to you.

Check Pricing and Flexibility

You will need to determine the rates that you will be paying that labour hire business to obtain the services of a worker. If the rates and pricing are reasonable, you should check to see whether the labour hire provider has the right to increase these rates in the future. You can check this in your labour hire agreement. If they can increase prices, ensure that you do not have to obtain workers only from them.

You should also check whether the provider can meet your requirements. 

For example, will the labour hire provider be able to supply workers to you on short notice? This will need to be set out in any contract you have with the labour hire provider.

Further, as the employee that you hire under a labour hire agreement will be under your supervision, you will likely be responsible for their actions. Here, it is crucial to ensure that you have adequate insurance if the worker were to cause any damage to property or injury to any other employees.

Licensing Requirements

In Queensland, Victoria, and South Australia, labour hire businesses must have a licence. Even if your company operates from another state, if you engage a labour hire provider in these states, you should ensure that they have a licence. 

If you engage a labour hire provider that does not have a licence, you could face penalties. You should include a clause in the labour hire agreement that ensures the labour hire provider has all appropriate licences.

Key Takeaways

If your business quickly needs to hire new workers, you might want to work with a labour hire provider. By undertaking your due diligence on the labour hire provider and properly reviewing any agreements, you can better protect your business. You will need to ensure that the labour hire provider is experienced within your industry and has the appropriate licences. You should also ensure that you understand any obligations or restrictions that a labour hire agreement might include. If you have any questions about obtaining a labour hire agreement, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.


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