Labour Hire ~ all about it

 Labour Hire ~ all about it
In the following, let’s refer to two companies, “Think Recruitment” a labour hire company, and “Able
Manufacturing”, a manufacturer of widgets. There is also Johny Bloggs who is the employee, but of who?
What is Labour Hire?
Simply put it is where Johny Bloggs is employed by Think Recruitment, but works for Able
Manufacturing. Able Manufacturing pay Think Recruitment for the time Johny works at Able. The
duties of being an employer are shared by Think and Able according to the table below:
Think Recruitment
Employment checking:
ƒ References
ƒ Current licences
ƒ Plant and machinery tickets
ƒ Interview
ƒ Probity, WWC and Police checks
Paperwork
ƒ Tax file no.
ƒ Superannuation details
ƒ Bank account
ƒ Personal information
ƒ Health and fitness checks
including medical if required.
Induction
ƒ Site introduction
ƒ Site hazard inspection (if a new site)
ƒ Drug & Alcohol testing if required.
Administration
ƒ Wages payment
ƒ Superannuation payments
ƒ Workers compensation payments
ƒ Payroll tax payments
WHS (OHS)
ƒ Ensure work place remains safe
ƒ Rehabilitate injured workers
including
Return to Work (RTW) coordination.
ƒ Completed Workcover and
insurance documents.
Maintain work place policies.
Annually, provide financial and legislative
returns.
Able Manufacturing
Site safety induction.
Equipment and on the job training
including any SWMS
Day to day direction on work duties
WHS (OHS)
ƒ Maintaining a safe environment.
ƒ Reporting any incidents
or accidents.
ƒ If rehabilitation is required after
an accident, assist in the provision
of suitable duties.
Completing timesheets and paying
Think Recruitment invoices.
Ph 0418 467 884 - Fax 02 8456 6051 - PO Box 286 MOSS VALE NSW 2577
www.thinkrecruitment.com.au [email protected]
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Johny is employed as a casual by Think Recruitment and the reason for this will become more obvious
later.
Why would Able Manufacturing want to use Labour Hire?
As is Able able to efficiently manufacture widgets, so is Think able to recruit, select and administer
staff efficiently and effectively. If Think Recruitment tried to manufacture widgets, they would not be
competitive and similarly, Able cannot be competitive as Think in staffing solutions. Each to their own
area of expertise.
But there are more specific circumstances:
Short term work overloads. Able may have won a new contract that needs additional
production staff for a week or perhaps 3 months. They may have had a container to load or
unload. In these examples, it is not in the best interest of Able to “drop everything” to recruit
short term staff. In any event, Think Recruitment would most likely have suitable staff ready
and waiting for work and can start immediately.
Only pay for what you use. Casual staff are paid (and charged by Think Recruitment) for
actual time on the job. So if Johny gets sick, the job gets rained out or he wants to take a break,
he doesn’t get paid for it and Able Manufacturing is not charged. It’s the same for public
holidays, no hours worked, no charge.
Special skills. It is not uncommon for organisations to require special skills for short bursts of
time (this could be for a week, a month or two days every week). In the case of Able, they may
need a Maintenance Fitter and a Rigger for 3 weeks to assemble a new production line just
imported from Lower Lithugania.
Absences. Jane Mills in accounts is taking a well deserved 2 months off to visit Lower
Lithugania. Obviously Able cannot survive without an accounting function, so they ask Think
Recruitment to find them a replacement person for the 2 month period.
Fear Uncertainty and Doubt (FUD) or Probationary periods. For various reasons
(usually an “unpalatable” experience in recruitment), or uncertainty about their own decision
making, some organisations elect to have the staff on Labour Hire for the duration of the
probationary period (usually 3 months). On completion of probation, they are transferred to
permanent positions within Able Manufacturing. (Usually at no cost to Able).
Unexpected and emergency situations. Able’s factory was hit by 120Km gusts of wind and
apart from the damage caused by the tree over the roof, the widgets and their boxes all got
soaked from the rain. Able need staff quickly to dry out and repackage the widgets. Think
Recruitment had Johny Bloggs available for the next few days before his next assignment and
solved Ables problem.
Simply do not want to have their own staff. They may have had a bad experience in
staffing, or a family company that needs more staff than they have family. In any event, they
would seek out Think Recruitment to get their “non family” staff. In some cases they ask Think
to make them permanent staff after probation but remain employees of Recruitment.
End of year financial year demands. This could cover a multitude of duties from accounting
to stocktaking.
Seasonal shifts in workloads. The best example is Christmas where there is a requirement
for additional retail staff, warehousing, delivery and forklift skills. A camping goods
manufacturer would require manufacturing staff over summer but not winter. Farmers need
people when the crops are ripe.
Ph 0418 467 884 - Fax 02 8456 6051 - PO Box 286 MOSS VALE NSW 2577
www.thinkrecruitment.com.au [email protected]
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Is GST Payable on the Labour Hire Fee?
Yes
Are there any other costs for Able Manufacturing apart from the Labour Hire Fee?
Usually NO. The labour hire fee covers all of the “standard” costs. From time to time there may be
“additional” costs. For example, Johny Bloggs has done an excellent job of cleaning up after the storm
and saved the factory cat from a confined space which he did not have to do. Able Manufacturing asks
Think Recruitment to pay him a $100 bonus as a thank you.
This reward may attract statutory payments (workers compensation, superannuation, payroll tax etc)
which will add roughly 20% costs, so the reward actually costs $120. Think Recruitment (being
benevolent, does not add a fee for this service) will invoice Able for $120 plus 10% GST, so Able must
pay $132
Workplace Health and Safety (WHS was OHS) Who is responsible?
In a word, EVERYBODY. Able Manufacturing is responsible for providing a safe working environment,
while Think Recruitment is responsible for ensuring wherever they place Johny Bloggs they have
satisfied themselves it is a safe environment.
After January 2012: Johny Bloggs is also responsible to obey WHS directions and follow correct
operating procedures and comply with any PPE requirements. He is also responsible (as is Able and
Think) to identify any hazards.
If Johny does get a work place injury, Able and Think are both responsible for his return to work
including finding any appropriate work.
As far as Workers Compensation is concerned, Able and Think may be jointly responsible. In 99% cases
it is Think Recruitment that has to bear the costs of any claims.
Why does Think Recruitment predominantly hire staff as casuals?
Johny Bloggs assignments are usually short term in nature. They could be one day at Able
Manufacturing, followed by 2 months at Smiths Constructions, one week at Carrs Automtive etc.
Hiring him as a permanent would mean terminating his employment after each assignment and then
rehiring him for the next assignment.
As a casual, he remains an employee of Think Recruitment although there may not be any work from
time to time.
This does not stop Johny for working for any other organisation provided he keeps his confidentiality
agreement.
Ph 0418 467 884 - Fax 02 8456 6051 - PO Box 286 MOSS VALE NSW 2577
www.thinkrecruitment.com.au [email protected]
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Why would people want to work as Labour Hire staff?
There are several fantastic opportunities for them:
Currently unemployed. Johny could be just looking at income until he finds the “right” job.
Working casually at multiple sites suits him as it gives him the opportunity to assess the work
and the company before he makes a long term commitment AND he gets money coming in until
he finds that right job.
Higher pay rates. Casuals are paid (usually) 25% above the wages paid to permanent staff.
This is to compensate them for not getting paid sick and annual leave and not being paid for
public holidays. Some people prefer this higher income as they rarely take holidays and never
get sick.
Taxation advantages. While Johny is employed by Think Recruitment he has only one
employer and may claim the tax free threshold from Think Recruitment. If Johny worked at
Able Manufacturing and also at the Lower Lithugania Pub in the same week through Think, he
only has one employer. BUT if he worked independently at the same places, he could not claim
the tax free threshold at the Pub and be taxed at 47% - half his money GONE until the end of
the taxation year!
They can change employers, be a free agent. Johny is free to work for the competitors of
Think Recruitment should Think not be able to find suitable work for him (subject to
confidentiality matters).
Ph 0418 467 884 - Fax 02 8456 6051 - PO Box 286 MOSS VALE NSW 2577
www.thinkrecruitment.com.au [email protected]
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