Labour Hire Arrangements – Host Employers
08 Jul 2022
Saras Varatharajullu
In 2018, Victoria became the third state in Australia to pass legislation (the Labour Hire Licensing Act 2018 (the “Act”) that implemented labour hire licensing requirements. With the implementation of this Act, providers and host employers now have obligations they need to comply with, otherwise they face heavy penalties for any unlawful conduct.
To understand what “labour hire” is and the obligations of providers, please refer to this article – Labour Hire Arrangements – Providers: https://constructivelegalsolutions.com.au/labour-hire-arrangements-providers/
Advantages and disadvantages of using labour hire workers
Utilising labour hire workers has its advantages and disadvantages and we address them below:
| Advantages | Disadvantages |
| Host employers are able to maximise their assets, having someone fill in while an employee is away on long term leave | Host employer may be liable for any damage/injury in certain circumstances |
| Where workloads increase, host employers can meet demands without going through lengthy processes of recruitment | Labour hire provider may be supplying workers to a host employer’s competitor which may lead to issues of conflict of interest or confidentiality |
| Costs of employment may be avoided – e.g. accrual of leave entitlements, workers compensation, etc. | Where a host employer has strong union presence on its sites, unions may oppose such an arrangement |
| Claims of unfair dismissal or industrial relations issues on employment may be avoided | The host employer may experience loss of in-house skill. The labour hire worker would be trained up to the company’s processes and upon completion leave the host employer, taking with it the time spent training them up and the experience built. |
| Highly beneficial in situations where the host employer only requires a worker for a short duration or for the completion of specific tasks. | The host employer is reliant on the labour hire provider and could be left without workers if the labour hire provider faces industrial problems or goes bankrupt |
| Allows the host employer to fill in any skills gap within its own employee pool |
Documents to request from providers
As you engage with labour hire firms, it is advisable that you require them to hold a labour hire licence and to also provide you with proof of insurance coverage for items such as workers compensation and public liability.
Payment of labour hire workers
A host employer has a commercial contract with the labour hire provider where labour (worker) is supplied. As the worker performs work, the host employer pays the labour hire provider who in turn pays the worker.
Importantly to note is that there is no contract between the worker and the host employer and therefore the amount of claims a worker can make against a host employer is very limited. Instead these workers would be able to make claims against the Provider who is in fact classified as their employer.
However, in situations where the labour hire provider and the host employer are related entities, it may be found that the host employer is in fact the employer for the worker.
Managing the safety of labour hire workers
Just recently, the OHS Act was amended to ensure that labour hire workers have the same rights and protections as direct employees of a host employer. The definition of “employer” and “employee” in the OHS Act was extended to identify labour hire workers as employees of both the labour hire provider and the host employer.
This means that both the labour hire provider and the host employer are responsible for the safety of labour hire workers and shared responsibilities for their health and safety.
These shared responsibilities include:
- Training
- Assessing risks – no gaps in health and safety for labour hire workers
- Providing and maintaining a working environment that is safe and without risks to health and safety
- Monitoring the health of employees
- Monitoring conditions at the workplace
Therefore, host employers should work with labour hire providers to consult, cooperate and coordinate with one another, as reasonably practicable, to ensure the health and safety of the labour hire workers.
WorkSafe has published specific guidance to assist duty holders in complying with their new requirements.
Failure to comply with consultation requirements can expose duty holders to a fine of 180 penalty units (as of the date of this article around $32,000) for individuals and 900 penalty units (as of the date of this article around $163,000) for bodies corporate.
If you are intending on engaging with a labour hire service provider or have questions around existing arrangements or concerns around the recent changes regarding health and safety obligations for a host employer, you may contact us on admin@constructivelegalsolutions.com.au or 1300 972 092.
We are also able to assist with drafting a labour hire agreement and have a labour hire briefing document that can be made available to you on request.
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