Sapna is a content writer at Sprintlaw. She has completed a Bachelor of Laws with a Bachelor of Arts. Since graduating, she has worked primarily in the field of legal research and writing, and now helps Sprintlaw assist small businesses.
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When you hire labour, your workers are technically employed by someone else. However, this doesn’t mean you don’t have any legal responsibility towards them. In fact, there’s a number of regulations business owners need to keep in mind when hiring labour from a source outside their business.
Keep reading and we’ll walk you through everything you need to know about labour hire regulations. That way, you can be legally compliant the next time you decide to engage labour hire services.
What Is Labour Hiring?
Let’s say, you own a construction business and have scored a great contract. You’ll be needing some skilled workers to help carry the agreement out. Or you own a tech start up and need some software engineers to assist in building a new system. As you’ll be requiring the workers for a specific purpose, it might make sense to hire them from outside the company for the duration of the project.
So, you get in touch with a trustworthy company and ask them for a few of their employees to help out with your task. You’ll be the one supervising them, however they are still an employee of the company that sent them.
Instead of paying the workers directly, you’ll most likely pay their employer, who is responsible for providing their employees with their correct pay and entitlements. Very much like ‘hiring’ something than returning it – except this time, you're hiring a person for their respective labour before they go back to their employer.
This is known as labour hiring.
Do I Need A Labour Hire Licence?
No, you don’t need a licence to hire workers for labour hire. However, the company you plan on hiring your workers from may need to have a labour hire licence, depending on the industry you’re in. It’s imperative to check what legal requirements need to be met by a labour hire provider and conduct thorough research to make sure the provider is a good one.
As you probably understand, associating with a company that isn’t following the correct legal procedure can reflect badly on your business, even if you weren’t the one that did anything wrong.
There’s also the risk of fuelling modern slavery practices. It’s important to remember that sometimes modern slavery practices can be right under our noses. Labour hire arrangements can potentially be a place where workers are being exploited, so it’s best to be careful.
If you’re feeling confused about what steps to take in ensuring legal compliance, our Regulatory Compliance experts would be happy to provide some guidance.
What Legal Obligations Do I Have If I Choose To Hire Labour?
As we noted, just because the workers you’ve hired aren’t your internal employees, it doesn’t mean you don’t have any legal obligations towards them. Labour hire is something that is largely regulated by each industry.
Therefore, it’s important to check industry specific regulations for the exact rules. Overall though, every business choosing to engage labour hire workers are responsible for their health and safety. This means, following Work Safe's guidelines in keeping all workers safe from harm. Protecting the physical and psychological wellbeing of your workers can look like:
- Providing them with necessary safety equipment
- Ensuring all workers have adequate breaks
- Having anti-bullying and discrimination practices implemented
- Determining a procedure where safety concerns and other complaints can be handled
- Taking active steps to minimise any risk in the workplace
Labour hire workers have the right to stop or refuse to work in a place that possesses a threat to their safety. Prior to engaging workers, it’s a good idea to introduce them to your workplace by handing them a well drafted Staff Handbook or Workplace Policy. That way, they’ll be able to have a better understanding of their environment, which always helps in establishing a positive workplace relationship.
What Are Some Other Work Health And Safety Recommendations?
It's recommended to work together with the labour hire provider to make sure you’re creating a healthy professional environment for the workers. A labour hire provider might have compensation coverage for their workers and will likely have their own standards for employees, prior to sending them out to work for a host business.
When navigating this relationship, it’s important to understand the needs of each party, then collaborate to reach an agreement that benefits everyone.
What Is A Labour Hire Agreement And When Do I Need One?
Figuring out how the relationship between your business, the labour hire provider and the labour hire workers will naturally require some kind of negotiation before a final resolution is reached. We don’t recommend agreeing to a labour hire arrangement verbally, as this leaves no legal protection for any of the parties.
Rather, when you opt to start a labour hire agreement with a company, then it’s best to have a Labour Hire Agreement drafted, before starting any kind of work. Instead of trying to do this yourself, getting a legal expert to write one up for you is always a worthy investment. This way, you can be assured your labour hire agreement isn’t missing anything important and is working to protect your business.
Next Steps
Before you engage labour hire workers, talk to a legal expert about any legal considerations and make sure you have a professionally drafted labour hire agreement ready to go. To summarise what we’ve discussed:
- Business owners have legal responsibilities when hiring labour from external sources
- Labour hiring involves hiring workers from outside the company for specific projects
- Payments are typically made to the workers' employer, who is responsible for their pay and entitlements
- Labour hire does not require a licence, but the labour hire provider may need one depending on the industry
- Choosing a reputable labour hire provider is essential to avoid legal and ethical issues
- There is a risk of modern slavery practices in labour hire arrangements
- Work Safe has health and safety guidelines that should always be followed
- Employers must protect workers' physical and psychological well-being, following the guidelines
- Labour hire workers have the right to refuse work if their safety is at risk
- Providing workers with a staff handbook or workplace policy can help them understand the workplace and keep them safer
- It's best to collaborate with labour hire providers to create a healthy work environment
- A written labour hire agreement is essential for legal protection and should be drafted by a legal expert
- Seek legal advice and have a professionally drafted labour hire agreement before engaging labour hire workers.
If you would like a consultation on your options moving forward, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
Sapna Goundancontent writer
