General definition of labour hire services

In many cases, it will be obvious whether a particular arrangement is for the supply of labour.

Where it is not clear, you will need to look at the terms of the arrangement and the totality of the relationship between the provider and the other person, considering the real substance of the arrangement – what actually happens, not just what the contract says.

Factors that might suggest that arrangement has the character of the supply of labour may include:

• the provider supplies workers to fill roles, rather than delivering a defined scope of work.
• payment is structured by reference to labour (e.g. hourly, daily, or weekly rates), rather than outcomes or deliverables.
• the work is subject to the other person or host's direction and control.
• the work is not a specialised service.
• the provider does not contribute substantial non-labour inputs (such as materials, equipment, methodology, intellectual property, or design expertise).
• the host bears the commercial or legal risk arising from workplace injury, defects, or performance issues associated with the work.

The above list is not exhaustive and these and any other factors are not determinative on their own.  Each arrangement needs to be looked at as a whole.

The examples provided are for illustrative purposes only, and do not constitute legal advice. You should consider your particular circumstances when determining whether you require a labour hire licence. If you are unsure, you should seek legal advice.

See our page on: 

• excluded classes of workers for more information about secondment arrangements.
• transport for scenarios in a transport industry setting.

Scenario 1:

A hospitality staffing agency, HSA Pty Ltd (HSA) enters into an arrangement to supply waitstaff to a restaurant (the host) who requires extra staff for a large function. The waitstaff are directed and supervised by the host and are not providing a specialised service. HSA pays the waitstaff and invoices the restaurant based on the hours worked by the waitstaff. Considering the arrangement as a whole, its character is wholly or principally for the supply of labour. HSA is a labour hire provider and is required to hold a labour hire licence.

Scenario 2:

Accountant Partners & Co provides an accountant to prepare a client’s tax documentation. The accountant performs work in their capacity as an employee of the firm and is not directed or supervised by the client. Considering the arrangement as a whole, its character is the provision of professional accounting services rather than the supply of labour. Accountant Partners & Co is engaged to deliver a defined outcome using its own specialist expertise.

However, if the accountant were embedded within the client’s business and performing work under the client’s direction and control, the arrangement may be characterised as labour hire (subject to any applicable exclusions, such as secondees).

Scenario 3:

Marino Farms Pty Ltd (Marino Farms) operates sheep farming properties. We Supply Shearers Pty Ltd (We Supply Shearers) supplies shearers and wool classers to Marino Farms. Workers are paid by We Supply Shearers who invoices Marino Farms based on the bales of wool supplied.  Marino Farms delivers the sheep to the shed and collect the wool and We Supply Shearers workers direct and supervise the shearers. Considering the arrangement as a whole, its character is wholly or principally for the supply of labour. We Supply Shearers is a labour hire provider and is required to hold a labour hire licence.

Scenario 1:

Safety First Pty Ltd (Safety First) provides security guards to Shop with Us Pty Ltd (the shopping centre). The guards patrol during retail hours and are subject to the overall direction of shopping centre management. Safety First pays the guards and invoices the shopping centre primarily based on the hours worked.

The character of the arrangement is wholly or principally for the supply of labour. Safety First is a labour hire provider and must hold a labour hire licence. Holding a private security licence does not remove this requirement.

By contrast, Gardit Pty Ltd (Gardit) provides after-hours alarm monitoring and site-checking services to the same shopping centre. Gardit’s staff perform periodic checks, monitor alarms, and report issues. Gardit manages and delivers the service independently, provides its own equipment (including vehicles, uniforms, and communication devices), and is not subject to the shopping centre’s direction or control. Payment under the arrangement is for the delivery of a defined service.

In this case, the character of the arrangement is the provision of a security service, not the supply of labour. Gardit is not a labour hire provider.

Scenario 2:

Market Festival Pty Ltd (Market Festival) runs weekly night markets and employs twenty security guards. When one calls in sick, Market Festival arranges for Protect Pty Ltd (Protect) to supply Sam to cover. Sam is an employee of Protect and patrols alongside Market Festival's 19 other security guards.

The character of this arrangement is wholly or principally for the supply of labour. Protect is a labour hire provider, Market Festival is a host, and the worker is a labour hire worker. Protect must hold a labour hire licence, regardless of whether the arrangement is temporary or ongoing.

Scenario 3:

SafeParty Pty Ltd (SafeParty) is a company that provides security guards for birthday parties held at residential homes. It does not provide any other services. SafeParty enters into a contract with John and Joan Smith (the Smiths) to provide a security service for their daughter Mary's 18th birthday.

SafeParty sends one of its employees, Matt, to be the security guard for Mary's party. Matt is paid by SafeParty, and the Smiths pay a fixed fee for the service, not based on hours worked. Matt is not directed or supervised by the Smiths. Considering the arrangement as a whole, its character is the provision of a security service for a private event, rather than the supply of labour. SafeParty is not a labour hire provider.

Scenario 1:

Home Assist Pty Ltd supplies a Personal Care Assistant to Janet (an 86-year-old who lives at home) to help with personal and domestic tasks. Home Assist is not a labour hire provider. Although the arrangement involves the supply of a care worker, Janet is receiving services in a private capacity and is not conducting a business. Considering the arrangement as a whole, its character is the provision of a home care service to a private individual, rather than the supply of labour.

Scenario 2:

Home Cooks Pty Ltd (Home Cooks) arranges with Cooks & Chefs Pty Ltd (Cooks & Chefs) for Nicholas, a cook, to attend Maria’s home once a week. Nicholas is employed and paid by Cooks & Chefs, which primary invoices Home Cooks based on the hours worked although a small component of the invoice relates to ingredients.

The relevant arrangement is between Cooks & Chefs and Home Cooks. Considering that arrangement as a whole, its character is wholly or principally for the supply of labour. Cooks & Chefs is a labour hire provider and Home Cooks is the host, even though the work is performed at a third party’s premises (Maria’s home).

 

Scenario 1:

We Supply Workers Pty Ltd (We Supply Workers) provides workers to intermediary Apples Workforce Pty Ltd (Apples Workforce), which then on-supplies those workers to the host, Fresh Orchards Pty Ltd (Fresh Orchards), to pick and pack fruit. Under the arrangement, We Supply Workers remains responsible for paying the workers, although Apples Workforce makes those payments on We Supply Workers' behalf.

Considering the arrangement as a whole, the arrangement between We Supply Workers and Apples Workforce is wholly or principally for the provision of labour.

We Supply Workers is providing labour hire services because it supplies workers under that arrangement and remains obliged to pay the workers for performing the work, even though the payments are made indirectly through Apples Workforce.

Apples Workforce also provides labour hire services because it enters into a separate arrangement with Fresh Orchards under which it supplies those workers to perform work for Fresh Orchards. Considering that arrangement as a whole, it is also wholly or principally for the provision of labour.

Accordingly, both We Supply Workers and Apples Workforce are labour hire providers. Each entity provides labour hire services under separate arrangements and is required to hold a labour hire licence.