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News & Knowledge

Johnston Withers addresses labour hire inquiry

20th July 2016

Managing Director Graham Harbord of MSI's Adelaide law member firm Johnston Withers provides advice to the Parliament of South Australia Economic and Finance Committee.

As an expert employment lawyer, Graham was invited to provide advice to the Committee about the law affecting labour hire agencies and the workers and the businesses that they deal with. He provided a written submission to the Committee which described the different labour hire arrangements involving both employees and independent contractors.

Graham described how a labour hire agency may employ its own employees under a contract of employment or in the alternative might engage subcontractors. In each case the employee or subcontractor is placed with a “host firm” and is effectively directed by a supervisor from the host firm as to the work that he or she will perform. These arrangements may be contrasted with arrangements whereby, in the building industry for instance, a contractor provides subcontractors to build a particular structure for a fixed price. It may also be contrast with situations where a recruitment agency is engaged by a firm to seek out employees or subcontractors to work for the firm. In those cases the contract of engagement or employment is directly between the host firm and the employee or subcontractor. Whereas with the labour hire agency the contract is between the labour hire agency and the employee or the subcontractor.

Graham talked about how there have been complaints where labour hire agencies have engaged employees but not paid the correct wages, WorkCover levies or payroll tax. When they are found out they simply close up the agency and move on and open up another agency, thus seeking to escape the obligations to both the employees and the Government. He commented that it was his view that there does need to be a better regulation of this industry.

He did note however that the Work Health and Safety Act does provide much more comprehensive obligations on both the labour hire agency and the host firm which occupies the work site. Both parties have obligations to ensure that there is a safe work site and both may be responsible if there is an accident at the work site.

Graham also commented that the Committee could examine the concept of “joint employer” which is set out in legislation in the United States. In that legislation both the host firm and the labour hire agency are responsible for ensuring that proper wages and conditions are paid to the relevant workers.

Following Grahams’ presentation, the Presiding Member of the Committee commented that he found it to be extremely interesting and made the concepts relating to labour hire clearer.

Read the official Hansard report of Graham’s presentation.

About Johnston Withers - Adelaide

Johnston Withers is a mid-sized South Australian law firm with a social conscience. We have been serving our Adelaide and regional SA clients for nearly 70 years.

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