Not everything that goes under the label, “labour hire” these days is labour hire. And that can be a problem – especially when an inability to nuance between different categories of employment services results in all being tarred with the same brush, or when terms of business misalign with the agreements for the supply of employment services that the parties have actually made.
In this article I want to hazard a provisional distinction that might be made between labour hire and workforce contracting. It is not a distinction that is recognised at all levels; but it is becoming important as regulators, courts, and tribunals are being called upon to view more closely several different types of labour contracting that are evolving in the market for employment services.
Labour hire (or more correctly on-hire employment services) are services, where an employment services provider (ESP) sends its workers (employees or independent contractors) on assignments to perform work for a customer under the customer’s instructions. Typically, the employment services (consisting of sourcing and arranging the attendance of the on-hire of workers) are the primary “deliverable” for which the ESP is responsible. To emphasise that, the on-hire terms of business may say something like:
We are not performing the services set out in the assignment description; but only arrange for the attendance of our workers, at your request, to perform the work that you have described in the assignment description.
Workforce contracting services are services, where an ESP, under a contract which is wholly or principally for the supply of labour, engages or deploys a workforce to meet the requirements of a contract that it has to provide other services to the customer.
Examples of the other services could be: crop picking or harvesting services; ICT services, catering services, or cleaning services. In these cases, the employment services (engaging or deploying the workforce) are secondary to the result that is to be achieved, which may be that the harvest is brought in, IT support is provided, an event is catered for, or premises are cleaned.
What seems to distinguish workforce contracting from other forms of general contracting (or sub-contracting) is that the services consist wholly or principally of the supply of labour.
The graphic below illustrates what might be some of the more important points that distinguish workforce contracting labour hire.
These distinctions are important because they must eventually be reflected in the contractual and risk management arrangements and terms of business that employment services providers put in place. If they are not well understood, or are simply glossed over, there is a real risk of creating a misalignment between the services that are bargained for and the services that are actually supplied.
In those circumstances, a court or commission might be justified in reaching a conclusion that the terms of business failed to record accurately the parties transaction and might simply decide to ignore them – as you might have seen in the Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd litigation throughout 2013 -2015.
As stated above, the distinction made in this short article is provisional. No doubt it will evolve given time; but I hope that, in the meantime, it might encourage parties to these different types of employment services arrangements (and parties who are interested in regulating them) to think a little more closely about the distinction and to contribute to what seems to be an important discussion in the contemporary world of work.
Andrew C. Wood