Why a “moral” payment obligation might indicate the need for a labour hire licence

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As you know, a payment obligation has to be part of the arrangement between the provider and the individual who performs the work if the individual is to be regarded as the provider’s worker (as that term is defined).

Throughout the “Lachie & Martin” series of videos , I’ve been suggesting that, even where a temping agency arranges for a payroll company to go “on record” as the employer of its temps, the agency can be left with a residual payment obligation sufficient to constitute the temps as its “workers” for the purposes of the labour hire licensing Acts. Why is that?

It’s because that Acts are clear that the arrangement between a labour hire provider and the individual who performs the work needn’t be contractual.

Now, if the arrangement needn’t be contractual, it follows that the payment obligation needn’t be contractual either. So what sort of obligations could those be? I can think of several different sources for such an obligation. Perhaps you can too.

Keep in mind that an arrangement, as distinct from a contract, is essentially a plan of action that the parties intend to put into effect with a sense of (moral) committment to it even though it may not be legally enforceable.

What temping agency, when it is setting its temps up to be employed by a payroll company, doesn’t enter into such an arrangement? It’s the arrangement, rather than the employment contract, that can leave the temp agency with the residual obligation… and, hence, the need to obtain a licence.

We’ll take a closer look at some typical arrangements next month, when we examine the “employer-of-record” phenomenon as well as some of the myths surrounding it.

Andrew C. Wood

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