The workers, known as field employees, temps, on-hired employees or even just employees, are employed by the labour hire organisation. They are not employed by the company to whom they provide labour. This is an important distinction for the purposes of Occupational Healthy and Safety (OH&S) purposes, in particular who has legislative responsibility for ensuring a safe working environment. This has been tested in court (see below).
Examples of large labour hire organisations are SKILLED Group, Manpower, ResCo Services, Ready Workforce, Workforce Extensions and Kelly Services.
Examples of smaller or boutique labour hire organisations are Advantage Recruitment, Complete Staff Solutions,CSA, LabourCo and Jigsaw Personnel Pty Ltd (specialising in the timber and forestry industry).
The following items have a bearing on the determination of pay rates:
The following items have a bearing on the determination of charge rates:
The gross margin is generally calculated as a percentage value of the pay rate. In certain circumstances, it may be calculated as a specific dollar markup.
A schedule of rates is typically quoted to the client which includes
The charge rates for physical hours of time (ordinary plus overtime) are typically quoted for the position at discrete classification increments, for example, level 1, level 2, etc.
Most legal proceedings against labour hire companies fall into one of two broad categories. The first is unfair dismissal. There are few successful such cases because of the nature of the industry and because organisations are generally careful to emphasise that the work is casual and periodic and cannot be guaranteed. Many labour hire companies are careful to avoid terminology on their staffing systems that may imply an employee has been "terminated" because that can corrupt a defence against unfair dismissal, namely that the employee has not been terminated, there simply has just been no recent placement opportunities.
There is an argument that labour hire firms ought really to be calling their employees "contractors" which makes more explicit that such workers are providing subcontracted services.
The second broad category is a major issue for labour hire companies, namely workplace safety.
It may have been considered in times past that the client of the labour hire company, i.e. the workplace where the labour is performed, were responsible for the safety of their site. However, Drake Personnel Ltd trading as Drake Industrial v WorkCover Authority (Insp. Ch’ng) (1999) 90 IR432 was a significant court case which established that because the worker is an employee of the labour hire company itself, a joint burden of safety is imposed upon the labour hire company.
In this case, the NSW Industrial Commissions full session judged
In Labour Co-operative Limited v WorkCover Authority of New South Wales (Inspector Robins) (2003) 121 IR 78 at 84-85 the Full Bench of the New South Wales Industrial Relations Commission upheld the trial judge’s finding that it was reasonably practicable for the labour hire agency to have ensured against the risks to the worker’s safety by "adopting a positive and pro-active approach with [the client] to require steps to be put in place to avoid the risks as a condition of it making available" the services of the worker. The labour hire agency had sufficient control to ensure the adequacy of instruction, training and supervision, and could refuse to supply its employees to the client "until 14 appropriate and sufficient measures to ensure safety were implemented.
Since 1998 prosecutions of labour hire agencies and host firms have been taken regularly in most Australian jurisdictions, particularly in NSW and Victoria. In NSW, for example, the first prosecution of an agency and a host firm took place in 1997, and there have been half a dozen or so prosecutions of agencies and of host firms each year since 2002. In Victoria the first successful prosecution of an agency and of a host firm took place in 1999 (Extra staff and NCI Speciality Metals respectively), and since 2002 there appear to have been half a dozen prosecutions of agencies and of host firms annually. There have also been successful prosecutions against directors of labour hire companies for failing to prevent the agency from contravening its general duty to the worker.