Instances of labour hire providers underpaying staff is an issue that continues to appear within the Australian media, and unfortunately can occur most prevalently within the agricultural, trades, manufacturing and warehousing sectors. 

For example, a 2020 audit by the Australian Building and Construction Commission (ABCC), found that around 80 percent of labour hire firms are not paying their workers correctly. The audit of 63 labour hire employers in the building sector found only 21 percent were upholding all their workplace payment regulations. Most employers fell short when it came to keeping proper records and providing pay slips, however wage underpayment was the largest problem. 

In the same year, the Fair Work Ombudsman (FWO) secured a $22,440 penalty against the former owner-operator of a labour-hire company following the underpayment of 80 workers on a farm in Brisbane. The underpayment totalled $78,664 over an eight-month period. 

And underpayment isn't just limited to the semi-skilled and trades industries. In December last year, the media reported that a major recruitment and labour hire provider had underpaid thousands of temporary workers in finance, government agencies and administrative roles by more than $4.5 million. Hudson self-reported the issues to the Fair Work Ombudsman, revealing that more than 5300 current and former casual on-hired employees were short-changed between 2014 and 2020. This included penalty rates, overtime, loading, meal breaks and other allowances, with individual underpayments ranging from $1 to almost $20,000. 

While it is important to note that in most cases, underpayment is not intentional (Australia's employment legislation is one of the most complex in the world), it doesn't excuse underpayment of employees. 

There are benefits to labour hire 

Despite these incidents, this doesn't mean that employers should rule out engaging a labour hire provider altogether. In fact, there are many benefits of doing so. Labour hire generally operates in a triangular arrangement that sees companies with labour hire capabilities supply workers to employers for agreed fees. This allows a flexible approach to the engagement of labour, with employers able to scale their workforce to meet demand and organisational requirements. 

Furthermore, taking on the responsibility of recruiting and engaging a flexible workforce is challenging, particularly in Australia which has some of the most complex employment laws in the world. As a result, managing a contingent workforce can be a major distraction that negatively impacts a business and, if unfamiliar with the nuances - Awards, penalty rates, leave loading and more - can see employers run the risk of non-compliance themselves. 

It can, therefore, be highly beneficial to engage someone to manage your contingent workforce for you. However, as seen above, partnering with a labour hire provider that makes compliance the highest priority is absolutely essential. 

Partnering with a recruitment company and labour hire provider that has specific expertise in workplace relations and employment law as part of the core business is a good option. For example, Acclaimed Workforce has a dedicated team of Workplace Relations specialists that not only streamline the management of your workforce but also mitigate employment risk. 

It's important to proceed with caution 

For organisations looking to engage a labour hire provider, it is imperative to do your research and investigate all options available to you. Though it is typically the provider whose name gets dragged through the media mud, it also brings with it a reputational risk for the organisation that has leveraged that provider. 

In a time when the topic of wage theft can become a prominent news story and the FWO is taking a stronger stance against non-compliance, employers must consider who they entrust their workforce to, or else risk reputational damage when it comes to the relationship between stakeholders and customers. 

Furthermore, the issue of underpayment will see employers run the risk of their on-hired workers leaving to look for full time work or a provider with a better reputation. In an already candidate-short market, this could pose issues for employers when it comes to maintaining their contingent workforce. 

If you're needing assistance with on-hired labour or managing a contingent workforce, contact Acclaimed Workforce today. Whether you need casual staff to meet immediate needs or people for specific lengths of time, we provide first-rate on-hired employment services that reduce your employment risks and allow you to identify potential employees with the necessary skills and experience for the job.