LHA assists labour hire providers through engagement and education to help them understand their responsibilities and the risks of non-compliance with their legal obligations.
In a recent example, LHA assessed a provider for compliance with its legal obligations, and to ensure they were paying their subcontractors a sufficient amount so that the subcontractors could also comply.
The provider had attended LHA’s Security Industry Forum and gave insights into the challenges in the security industry. They also provided feedback on LHA’s Guidance for the security industry: cost of meeting your legal obligations.
Based on this engagement and LHA’s guidance document, they were equipped with the tools to become compliant.
The outcomes of the compliance assessment
LHA’s compliance assessment raised concerns that:
- some of their workers were classed as independent contractors when they were more likely employees
- some agreements with their subcontractors had low hourly rates, increasing the risk that the subcontractor would not be able to comply with its own legal obligations.
The provider explained they were preparing new subcontractor agreements to ensure rates in their supply chain were sufficient to allow all workers to receive the correct entitlements. They also provided the new agreements to LHA to demonstrate the positive changes they had made.
They showed ongoing willingness to operate compliantly by:
- reclassifying their independent contractors to employees and paying them correctly according to the Security Award
- increasing rates in new subcontractor agreements to allow their subcontractors to meet their legal obligations such as wages, superannuation, paid leave and GST.
As a result, the provider was able to mitigate the risks of non-compliance, ultimately benefitting workers in the business and its supply chain.
Avoiding complex harms
It’s important to engage workers correctly as either employees or independent contractors. There is potential harm to workers who are engaged incorrectly as independent contractors. They may not be receiving correct employee entitlements such as a minimum wage, superannuation and any required workers’ compensation insurance.
As labour supply chains become more complex, the risk of non-compliance and worker exploitation increases. Providers who engage subcontractors should ensure that the rates they pay are sufficient for those subcontractors to meet their minimum legal obligations so that their workers receive the correct entitlements.
Providers should regularly check to ensure they are compliant with their legal obligations. If LHA identifies a high risk of non-compliance, it will investigate whether the provider is meeting its legal obligations.
If it finds non-compliance, LHA could issue a warning, impose licence conditions, suspend or cancel a licence. This will impact or prevent a provider from operating.
For more information on meeting obligations when subcontracting, see LHA’s Guidance for the security industry: cost of meeting your legal obligations.