Labour Hire Intermediaries: What are they? (Part 1)

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In this post we continue our exploration of intermediaries under the Australian labour hire schemes. We analyse legislative references to intermediaries in the key definitional provisions relating to labour hire providers and workers and identify three different type of arrangements in which intermediaries may be found. We suggest that intermediaries may be categorised as supply intermediaries; recruitment/ placement intermediaries; and payment intermediaries.

The conversation so far…

I’ve been enjoying our conversation about the position of labour hire intermediaries under the four current Australian labour hire schemes.

In the prologue to the conversation, last week, I set out 12 reasons for taking a closer look at the difference between labour hire providers who need licences and mere intermediaries who don’t. Among the reasons, I included the lack of definitions and clear guidance. Charles Cameron, CEO of RCSA, brought an additional perspective when he commented:

“…the capacity of regulators to simply define the modern labour market is greatly constrained.”

There’s perhaps a reason for that, and it might be that regulatory understandings of labour hire have not kept pace with the way recruitment and staffing firms have responded to change, continually innovating new ways of doing things and new specialisations, to improve the effective operation of the labour market.

In our first exploration of the topic, I offered a description in under 100 words of the four current Australian labour hire licensing schemes and observed that:

Typically, an intermediary is positioned in the arrangement between:

– a provider and a host; or

– a provider and its workers

but is not a provider itself.

Intermediary service network roles facilitate the supply of a labour hire service. They include roles such as sourcing & screening, contractor management, accommodation provision, and payroll.

Ian Lindgren’s feedback was insightful. Ian argued that it would be difficult to achieve clarity on this topic until:

…the definitions of the entities that form the “intermediaries” are universally accepted throughout the industry to the same degree as Provider, Host and Hirer.

So, in this post we’ll have a look at what the Acts actually say on the topic of intermediaries. Fair warniing, though, it’s not much!

“The Regardlesses”

It sounds like it could be a good name for an indie rock band. But they’re actually a set of provisions that have been inserted into each of the four state and territory labour hire licensing acts to expand their scope and as an anti-avoidance measure targeting sophisticated, multi-party and tiered arrangements that utilize intermediaries to create a buffer between provider and host, or between provider and worker.

They’re not identical across the four licensing schemes. So, I’ve simplified them a bit for the sake of representing them in the following table.

Table 1

You’ll see that the intermediaries are positioned, in these provisions, specifically in relation to the supply (Qld, SA, Vic & SA), and the recruitment/ placement (Vic) of an individual who is a worker as defined for each different type of provider.

A bit of a tangle

Taken individually, “the regardlesses” appear to make some sense. It should not matter whether the worker is an employee or an independent contractor (assuming the distinctions still hold good after the High Court hands down its decisions in two cases currently before it).

It should not matter if the work is performed under the control of the host or someone whom the host appoints to control the work (assuming that control is (and remains) one of the distinguishing features of an employment relationship).

It should not matter whether the workers are recruited, placed or supplied directly by their provider or through tiered arrangements.

But taken together, they create a tangle because a labour hire provider may be a party to a non-contractual, indirect arrangement for the performance of work that could be under the control of anybody or nobody at all.  In the midst of that tangle, it can be difficult to distinguish providers from intermediaries.

One sure thread

Our one sure thread is that intermediaries do not have workers. Only providers have workers. So who is a worker?

Who is a “worker”?

In the table below, I’ve set out the distinguishing features of the provider/ worker relationship in each of the four licensing jurisdictions. 

You will see that there are three different types of arrangement. Note their differences. Can you also see why in our October 1st post, we suggested that good governance of labour hire workforce arrangements has to start with a clear and detailed understanding of:

  • what everyone is doing; and
  • the source of their obligations and responsibilities?

Table 2

Some of you will have noticed that I left out the various statutory, regulatory and declaratory exceptions.  That’s a topic that we can save for a different discussion.

Take Away Lesson

When the positioning of the intermediaries is presented in this way, I think we can start to see that they can be classified into three groups. Note where the obligation to pay the worker falls for each group:

  • supply arrangements (provider has obligation)
  • accommodation/ recruitment arrangements (host/client has obligation)
  • contractor management/ recruitment arrangements (anyone can have the obligation).

Also note that three of the schemes (S.A.; Vic and A.C.T.) contemplate that payment to the worker can be made directly or indirectly through intermediaries. But it must always be an obligation to pay for the work (either in whole or in part). That is quite possibly the case in Queensland as well; but it is not expressly stated.

There may be cases where a worker is rewarded for their effort otherwise than being paid for the work. They might, for example, be rewarded by payment of directors’ fees, distribution of share dividends, or a trust distribution under their own company and trust arrangements. It might be difficult to say that being rewarded in that fashion is payment for the work or that it is any part of the arrangement made with the provider.

I think we can also identify three types of intermediaries from the legislative references:

  • supply intermediaries
  • recruitment/ placement intermediaries
  • payment intermediaries.

Next Steps

In our next post, we’ll continue our examination of the position of intermediaries by looking in more detail at the three types of intermediaries. We’ll try to develop a sense of what they are typically doing and what distinguishes them from providers. We’ll also discuss some of the more challenging arrangements, where staffing agencies may be performing mixed functions.

Meanwhile, if you’d like to join the conversation, head across to the RCSA-hosted Labour Hire Licensing & Regulation (Aust & N.Z.) LinkedIn Group, where I’ll be moderating discussion. Alternatively, you can post a reply here or on my blog, The Recruiters’ Casebook.

Let’s talk soon.

Andrew C. Wood

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