Case study: Improving transparency in complex supply chains in the security industry

18 October 2023
Case study: Improving transparency in complex supply chains in the security industry

Through its efforts regulating the security industry, LHA has found an inherent increased risk of non-compliance in complex supply chains, due to the arrangements not always being transparent to regulators.

LHA has also found that high levels of competition in the security industry can lead to contractual arrangements that do not allow a business to meet its legal obligations, particularly in complex supply chains.

LHA recently reviewed Wilson Security Pty Ltd’s arrangements with its subcontractors to ensure:

  • LHA has awareness of the labour hire providers in its supply chain
  • that Wilson Security is acting responsibly to ensure its subcontractors can comply with their legal obligations.

Increased visibility of complex supply chains enables LHA to more effectively regulate all parties involved in the provision of labour hire services. Low contract prices between businesses in supply chains can be an indicator of potential risk that a business will not meet its minimum legal obligations owed to workers.

Outcome of compliance review 

LHA found that Wilson Security’s arrangements did reasonably allow both the company and its subcontractors to comply with their legal obligations, including for: 

  • wages
  • leave entitlements
  • superannuation
  • portable long service leave levy
  • workers’ compensation insurance 
  • GST.

However, as part of its approach to increasing transparency in supply chain arrangements in the security industry, LHA imposed its supply chain transparency conditions on Wilson Security’s licence. 

LHA’s transparency conditions require providers to periodically report details to LHA about their subcontractors, so that it can effectively regulate all parties in the supply chain who may be providing labour hire services. 

These conditions allow LHA to confirm all providers involved in Wilson’s provision of labour hire services are licensed and to check as required whether the subcontractors are meeting their legal obligations. 

When presented these conditions, Wilson Security indicated its support for LHA’s efforts regulating the provision of labour hire services in the security industry. They also acknowledged that complex supply chains present a significant challenge for the industry.  

“It is our belief that greater accountability and transparency in subcontracting arrangements will improve outcomes for workers, businesses, governments and communities,” Wilson Security CEO Nick Frangoulis said.

By creating more transparency within the industry, businesses are disincentivised from engaging in non-compliance.

Improving compliance across complex supply chains

The risk of worker exploitation and non-compliance is heightened as supply chains increase in complexity. LHA encourages all hosts and providers involved in the provision of labour hire services through complex chains to retain an appropriate level of oversight and responsibility. 

One of the most important things that all businesses can do to ensure compliance is confirm they are entering into contractual arrangements that reasonably allow providers to comply with their minimum legal obligations.

More information

For more information, please see the 2023-24 Guidance for the security industry: Cost of meeting your legal obligations.