Guidelines for using Labour Hire Providers

Growers all around Australia rely on Labour Hire Providers for the engagement of seasonal workers. Contrary to widespread belief, using a Labour Hire Provider does not entirely release the grower from their legal and ethical duties to ensure compliance and workers’ welfare. Therefore, it is important to have good processes in place to manage the outsourcing of labour and mitigate the risks involved.  

Here are some key recommendations around the use of Labour Hire Providers: 

Do your due diligence upfront  

Before you choose a Labour Hire Provider, it is important to do your due diligence. Steps for selecting a professional provider and identifying dodgy operators may include: 

• Reference checks (asking around for experience with a provider)  
• Check if the provider has the appropriate license (if applicable) and examine the restrictions and history of that license 
• Look for a provider with StaffSure certification (www.staffsure.org) 
• Check for unusual patterns that could point towards a sham operator, for example: 
  • Frequent changes to the business name or ABN  
  • No physical business address or phone number 
  • No track record of GST 
  • An ABN check that reveals the entity was registered very recently 

Sign a written contract 

Your business relationship with the Labour Hire Provider should be documented in a written contract that outlines each party’s legal and ethical obligations to one another and towards workers. The contract should also cover off on how adherence to these obligations will be monitored. Further guidance on what should be included in the contract is given in the Fair Farms Standard.

Monitor what goes on  

Continuous monitoring is critical for ensuring that your Labour Hire Provider sticks to their side of the bargain. After all, that’s what you are paying them for. You should put robust monitoring practices in place that suit your circumstances. Ways to monitor the provider should include: 

• Asking to review a random selection of worker pay-slips periodically  
• Asking the provider for evidence of paying super 
• Inspecting worker accommodation or requesting photos  
• Educating workers about their legal rights and entitlements 
• Providing a grievance process for workers  

Pay a reasonable fee 

You should ensure that the fees charged by your provider are enough to cover their costs plus a reasonable profit margin. The provider’s costs should normally include: 

• Minimum wage for workers (keep in mind overtime and piecework provisions if applicable) 
• Superannuation 
• WorkCover and other insurances
• Payroll tax 
• Admin overhead  

Always remember that if a price seems too good to be true, it probably is. Such a proposition is often built on underpayment of workers.  

Avoid further subcontracting 

Finally, one should be cautioned against further subcontracting of labour (ie. your provider engaging another provider to send you workers). Experience shows that extending the labour supply chain increases the risk of workers being exploited, as each business in the chain takes their cut, often not leaving enough for the worker to get a legal wage. While further subcontracting can be legitimate in certain circumstances, for example for contingency workforce planning, as general guidance, it requires additional due diligence and should be avoided.  

These and other topics around ethical employment are covered in the Fair Farms Standard, which outlines the accepted principles of fair and ethical employment in Australian horticulture. Employers who wish to get trained and certified against the Standard can join the Fair Farms Initiative here: www.fairfarms.com.au/registration

For more information, visit: www.fairfarms.com.au or email us at fairfarms@growcom.com.au