In this quick guide to labour hire services in Australia; we define labour hire, explain how it works, tell you who can use labour hire services, detail the benefits of labour hire, and look at the new laws governing labour hire in some Australian states.
What is labour hire?
How does labour hire work?
Who can use labour hire services?
What are the benefits of labour hire?
What is the Australian legislation with regards to labour hire?
Where can I find more information?
If you’re an entrepreneur, then you know that your workforce forms the core of the business operation. Your workers create the product, market and sell it, in addition to running other aspects of the business in between. Having an inadequate or an unqualified workforce could bring any business entity to its knees.
Labour hire aims at providing businesses with skilled and unskilled short- or long-term labour to ensure that your company is adequately staffed with high-quality workers for optimum operation. The labour arrangement does this while providing your business with the workforce flexibility it needs to remain competitive in the market.
While the concept of labour hire has existed in Australia for a long time, it’s from 1990 onwards that the labour arrangement started picking up steam in the labour market. Labour hire has since become one of the most popular flexible work arrangements in the nation, providing about 5% (or 576,700 workers) of the Australian workforce according to 2008 figures provided by the Australian Bureau of Statistics. (Source: abs.gov.au)
So, what is labour hire? Labour hire is a labour provision arrangement whereby a third party, referred to as a labour hire firm or labour hire agency, provides your company with skilled or unskilled workers on a hire basis for short-term or long-term work engagements.
The worker provided to your company by a labour hire firm is known as a temp or on-hired worker. An on-hired worker, although they work at your business (and even wear your uniform if required), is not your employee but is employed by the labour hire company that provided them to you. Your business only hires them out from the labour hire firm for the duration they are needed.
This means that the employer-employee relationship with the on-hired worker solely lies between the worker and the labour hire firm. As such, the labour hire firm is responsible for the worker’s remuneration as well as other employee entitlements and benefits. All you’re required to do is pay the labour hire firm a fee for the services provided by their worker and they shall take care of the rest.
A labour hire firm sources, vets and then adds qualified job-seekers looking for work within the firm’s field of specialisation in their database. When a client approaches the labour hire firm in search of a specific skill set, all the labour hire firm does is check its database to find the best match for you and then assigns the employee to your company.
Because the sourcing and vetting aspects of recruitment have already been taken care of, qualified workers can be provided to your business in as little as a day’s time.
The worker provided will then work in your company, report to you, and even wear the company uniform if needed i.e. they will work just like any other temporary or casual employee would. The on-hired worker will remain in your business for as long as you need them and you can end the engagement when their services are no longer required with no hassles.
Any company that needs employees can benefit from labour hire as it helps recruit quality skilled and unskilled labour very quickly. You can use labour hire in mining, retail, hospitality, construction, manufacturing, health among other sectors for your labour needs.
Labour hire is especially useful when:
- You’re short on staff due to increased demand,
- You have an ill employee and need a short-term replacement, or when;
- You need a workforce for a project.
Basically, if you need quality workers in a hurry, labour hire is your answer.
Over the years labour hire has become the most popular flexible labour arrangement in Australia because of the following reasons:
Using labour hire for your business’ labour needs gives you the flexibility to adjust your workforce to suit your needs. You can bring in more workers when you need them and reduce the staff numbers when there isn’t enough work to justify extra workers.
Also, you can use on-hired workers to allow your permanent workers more flexible working hours or reduce reliance on employee overtime. This will help keep your employees happy and engaged while avoiding employee burnout.
- Cost saving
Recruiting is expensive, especially when you have to do it a couple of times each year to cover short-term employee shortages. Labour hire handles all the recruiting-legwork for you which keeps the cost of recruiting low for your business.
And because you can adjust your workforce to match your current labour needs, you will not need to pay for idle labour when business is low. This way you can keep a lean core workforce and make staff additions using labour hire when the need arises which will save you money.
- Less downtime
An employee shortage due to illness, leave or an unexpected departure could cause a production line to stop or even bring the entire operation to a halt. With labour hire, you can get a qualified replacement for your absent employee promptly to keep downtime at a minimum.
Because labour hire companies have a database of pre-vetted workers who are ready and willing to work immediately, they can have someone over at your place to help plug a labour gap in a matter of hours so you can meet your deadlines.
- Specialised recruitment expertise
Labour hire firms are specialised entities that focus on the procurement and provision of labour. As such, these companies have developed tactics, strategies and economies to make their recruitment processes as efficient and cost-effective as possible.
This ensures that you get quality workers whenever you use a labour hire firm to acquire workers. It also means that your labour hire company can help you find even the most niche skillsets in the market faster than you could if you went at it alone.
- Large skills pool
With a labour hire company, you have their entire database of pre-vetted and pre-qualified workers at your disposal. You can leverage this skills pool for bulk hiring or to get specific expertise whenever you need them without having to recruit or bring someone on board permanently for a short-term position.
Labour hire provides you with an army of qualified workers on standby who can be deployed at any point you need them. And you won’t have to pay their overheads when you don’t need them.
Some states in Australia have introduced (or are in the process of introducing) labour hire legislation that could affect businesses that are within their scope. In Queensland, Victoria and South Australia, labour hire firms operating within the jurisdictions will be required by law to have a labour hire license. In the same breath, businesses using labour hire services will be required by law to procure them from licensed providers.
This legislation is already in force in Queensland with South Australia’s and Victoria’s labour-hire laws coming into full force in 2019 and 2020 respectively. Non-compliance could attract fines of more than $500,000 for corporations and jail time for individual culprits. (Source: maddocks.com.au)
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