How labour hire works in Australia
Labour hire creates a triangular employment relationship between the agency, worker, and host employer. The Fair Work Act and state licensing schemes regulate these arrangements.
Labour hire agency
- Legal employer
- Pays wages and super
- Provides entitlements
- Manages compliance
Worker
- Employed by agency
- Works at host site
- Follows host direction
- Full Fair Work rights
Host employer
- Pays agency fee
- Directs daily work
- Provides safe workplace
- No direct pay obligations
State labour hire licensing
Labour hire licensing requirements vary by state:
State licensing requirements
When labour hire is used
Businesses use labour hire for:
- Flexibility: Quickly scale workforce up or down
- Temporary cover: Fill short-term gaps without direct hiring
- Specialist skills: Access workers with specific expertise
- Trial before hire: Assess workers before offering direct employment
- Peak demand: Manage seasonal or project-based workload
Industries with high labour hire usage include hospitality, construction, manufacturing, logistics, and agriculture where workforce flexibility is essential.
Benefits of labour hire
For host employers
- Flexibility: Scale workforce as needed
- Reduced admin: Agency handles payroll
- Quick access: Workers available fast
- Try before hire: Assess fit before committing
For workers
- Variety: Work across different sites
- Flexibility: Choose assignments
- Experience: Build diverse skills
- Pathway: May lead to direct hire
Australian compliance tip
Host employers can be liable for underpayment of labour hire workers in some circumstances. Always use licensed agencies in QLD, VIC, and SA. The Fair Work Ombudsman can investigate both agencies and host employers for wage theft.
Managing labour hire workers
Effective management includes:
- Licensed agencies: Only use licensed providers in QLD, VIC, SA
- Clear agreements: Define roles, rates, and responsibilities with agency
- Safe workplace: Meet all WHS obligations for labour hire workers
- Integration: Include labour hire in team communications and training
- Time tracking: Use time and attendance systems for all workers
- Rostering: Include in rostering software for workforce visibility
Common mistakes with labour hire
Using unlicensed agencies
Engaging unlicensed labour hire providers in states requiring licensing.
Ignoring WHS duties
Not providing adequate safety training or equipment for labour hire workers.
Treating as contractors
Misclassifying labour hire arrangements as independent contracting.
Excluding from teams
Not integrating labour hire workers into team activities and communications.
Key takeaways
Labour hire in Australia involves agencies employing workers and placing them with host employers. State licensing schemes in QLD, VIC, and SA regulate agencies, while Fair Work legislation protects workers' rights.
Host employers benefit from workforce flexibility but must ensure workplace safety and use licensed agencies where required. Using workforce management software helps integrate labour hire workers into rosters and track time alongside direct employees.
