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What is Labour Hire? Everything You Need to Know

By fastlabourhire • Dec 19th 2022
What is Labour Hire? Everything You Need to Know

Have you ever wondered, what is labour hire and how does it work? It’s not always clear what a labour hire company does. This can leave many people feeling a little unsure about whether to partner with a professional agency. 

Fortunately, if this is something you have been wondering, our experts are on hand today. We’ll help you find out more about the benefits of labour hire and how this option could work for your business.

What is Labour Hire?

labour hire company melbourne

First of all, we need to clarify what labour hire actually is. 

Labour hire is a unique arrangement whereby a business hires a temporary worker rather than taking on a new staff member. 

Usually, these staff members are needed to support specific projects for a set fee. Otherwise, they may be hired on a temporary contract basis.

What Sort of Workers are Available Through Labour Hire?

Professional labour hire services can cater to any type of workforce need. As such, depending on the client’s preferences, the available workers include apprentices and trainees. In addition, suppose you have tasks with greater responsibility. In such cases, agencies can provide experienced workers in several categories.

How Does Labour Hire Differ From a Casual Workforce?

an image of a labour worker

Labour hire differs from hiring workers as casual labour since the employer doesn’t complete the hiring process in-house. Instead, companies outsource the hiring process to a professional team.

Often, an employer may make a contract with the labour agency rather than with the employee. Meanwhile, payments are made to the management agency. After this, the employee receives payment for their services from the labour hire company.

Another important difference here is that hire staff are not independent contractors. This is because they have a contract with the labour agency directly. So, they are still employed, and they receive a similar benefits package accordingly.

What Does the Hire Fee Cover?

The fee paid by the employer to the labour hire business is for the work done on site. It is not a fee to hire the labour directly.

Labour hire fees cover all aspects of managing an engaged and professional workforce. As such, this includes tasks such as training, purchasing equipment, licensing, and so on. Some other examples of expenses for such teams include hiring processes, insurance, and so on.

Does Labour Hire Meet All of my Project’s Obligations?

an image of a labour worker in the workplace

Labour hire agencies are legally responsible to ensure that the services they provide meet Australian industrial law. Plus, all workers employed by hire companies must comply with the employment conditions of the project manager.

In return, labour hire workers receive wages and conditions relative to their specific employment. The rate of pay for staff may also be based on any applicable industrial awards. This helps ensure that all workers, whether directly employed or hired through a hire company, receive a fair pay rate.

How Do Enterprise Bargaining Agreements Relate to Labour Hire Teams?

Enterprise bargaining agreements only cover workers if a clause is added to their contracts. Enterprise bargaining agreements take place between the labour agency and the staff it hires.

This scenario can mean a single project may provide different pay levels between workers. This will usually depend on whether they are employees of the business or the agency.

Are Labour Hire Agencies Reputable?

an image of labour hire workers in a construction site

One common concern many businesses have is the dependability of firms supplying labour services. Luckily, you don’t need to worry about this. Indeed, the State governments of Victoria and Queensland require labour agencies obtain a license to operate.

Other Names for Labour Hire Agencies

A labour hire agency is known in other countries by different names. In the UK, it is called an ‘employment agency’ and in the US as a ‘professional employer organization’.

People employed under such arrangements in the UK and Europe are known as agency workers. Meanwhile, it is referred to in the US as ‘labour contracting’ or ‘permatemping.’ In South Africa, it is sometimes known as ‘labour brokering’.

How Do Labour Hire Services Work?

an image of labour hire workers in the workplace

At this point, we’ve outlined what a labour hire company is. But how does this form of business model work? 

Who Pays the Employee?

In Australia, a labour agency (AKA recruitment agency) is the initial employer. Employees sign their contracts with the labour agency, rather than with the employer they are outsourced to. As a result, the worker is paid by the labour agency directly. 

However, the employee still has to work within the conditions and agreements of employment set out by the employer. Sometimes, the employer may also be known as the ‘host’.

This is somewhat similar to being a contractor. However, working as a contractor comes with many drawbacks. For example, this could include not being protected against unfair dismissal.

What Fields Commonly Use Labour Hire?

an image of construction workers in action

Labour hire usually takes place on a project-by-project basis. It’s most often seen in jobs requiring manual skills (i.e., labourers). However, other common occupations include technicians, tradespeople, clerical/administrative staff, and machinery operators.

The building and construction, and mining industries are some of the biggest hirers in Australia.

The industrial sector often hires machine operators, process workers, mechanical assemblers and electrical assemblers.

Warehousing often requires store workers, forklift drivers, and pickers/packers.

Common Reasons to Choose Labour Hire

The most common users of labour hire services are employers in businesses that suffer from staff underemployment (e.g., due to illness). It’s also common when seasonal business demands drive businesses.

Finally, in cases of unexpected demand, a business with unstable supply chains can contact an agency for extra staff. Yearly audits and busy periods may also be an occasion to hire outside employees.

Businesses in the process of new construction or fit-outs for themselves may also need labour to keep running without disruption.

What Is Labour Hire Like For The Employee?

an image of a labour hire worker

There are many advantages to working through a labour agency for the employee. If you are specialised or highly skilled, this is especially valuable. As such, an increasing number of people are working for labour hire agencies rather than traditional businesses.

A well-established labour agency will have a variety of reputable companies on its books. This also gives workers, apprentices, and trainees much-needed valuable experience. This can help add to their skill set and resumé.

This model ensures that workers continue to get employment in their specific line of work. It can offer flexibility in factors like working hours, employment diversity, and scheduling labour hire work with other jobs.

What Are The Pros And Cons For The Employer?

labour hire agency melbourne

Imagine you’re the manager of a large retail warehouse. It’s nearly the Christmas season, and you need more staff to work in the warehouse on sorting and packing.

The warehouse also needs a major electrical upgrade. As such, the warehouse will undergo an extensive new fit-out in the quieter post-New Year weeks.

Unfortunately, your current employees are too busy with their regular work to lend a hand. That’s even assuming they had the required skill set!

But do you really have time to begin a recruitment process? Do you have the knowledge to know what skills and experience to look for? Can you recognize if they are qualified?

This is where it’s often easier to contact a labour agency. They will already have vetted, high-quality workers. They can also match workers’ skill sets to the job you have in mind. In this case, you only need to pay one fee. You won’t have to worry about processing payroll, tax, and worker entitlements (e.g., superannuation).

Both the employee and the employer sign a contract with the labour agency. However, the employer is not privy to the details of the contract between the labour agency and the employer (client).

an image of labour workers on site

As such, it can be a bit confusing to work out who’s responsible for what. The employee signs a contract with the labour agency but now works for the employer.

What happens if the employee is injured at work? Who deals with charges of discrimination in the workplace? Are the employees protected against unfair dismissal? These are all important questions to clarify.

Still, many large Australian businesses and companies are turning to labour hire. After all, it offers a cost-effective, time-saving option. Labour hire allows businesses to gain skilled labour at crucial periods in the annual work cycle.

Need A Skilled Worker Or Qualified Tradesman?

an image of a group of labour hire workers

Would you like to manage your tasks with help from a professional labour hire team? If so, please don’t hesitate to contact our experts at Fast Labour Hire today. We’re proud to deliver numerous excellent services for our clients, and we strive to hire the best teams possible. No matter what you need, our expert team of labourers should be able to help!

We can help ensure your project is completed perfectly, no matter your industry. Why leave it to chance?

Get in touch today if you have any more questions about “what is labour hire” or to book our services.

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