Harvest Trail Talk

Using a Labour Hire Provider (Contractor) – Important Tips

Posted on by Harvest Trail Information Service

Using a ‘labour hire provider’ (or ‘contractor’) can be an easier way to meet labour demand. The contractor sources workers, provides payroll and other legal requirements, and may even organise transport and accommodation.

However, growers need to be aware of some of the potential pitfalls associated with using a contractor.

‘Accessorial Liability’

Both the Fair Work Act and the Migration Act contain provisions around accessorial liability. This means that a grower using a contractor retains a level of legal responsibility to the workers provided by the contractor.

The grower must ensure, as far as is practicable, that the contractor operates within the law. They must do their due diligence to ensure that their contractor is a legitimate business and will operate legally and ethically in relation to their employment obligations to employees on the grower’s property.

Any grower knowingly or willingly entering into employment arrangements with a ‘dodgy’ contractor can be prosecuted alongside the contractor. Ignorance of the law is no defence. Very heavy fines apply in Victoria, South Australia and Queensland for unlicensed providers who provide or advertise labour hire services, and for Growers who enter into arrangements with them.

The importance of a written agreement

While the licensing legislation provides a degree of protection to host employers/growers, it is important to set out the roles and responsibilities in a written agreement between a contractor and a grower. This should establish the roles and responsibilities of each party. Most state-based grower organisations such as Growcom or the VFF have template agreements available to assist.

An agreement should be clear that:

  • Workers are employees of the contractor, not the host employer/grower.
  • All workers must be legally entitled to work – i.e. visa checks should be arranged by the contractor but the grower should ensure they get a copy of the paperwork confirming work rights for each individual worker.
  • Workers are not to be bonded in any way – i.e. the contractor must not retain passports or other documents, and cannot restrict movements or otherwise exploit workers.
  • If the grower wishes to disallow sub-contracting – this should be stated.
  • There needs to be clarity around who pays wages.
    • Ensure that wages and superannuation are being paid properly.
  • The contractor must have a current workers’ compensation policy.
  • The Fair Work Information Statement will be provided to all workers
  • The grower may request payslips, wage records and other documents as evidence that the contractor is operating in line with the agreement
  • Who conducts induction/s?
    • While the contractor may do their own induction, the grower should always do a structured Work Health and Safety induction on the farm – with the contractor if possible. It is vital that workers are made aware of their specific working environment, the hazards and risks, and rules and regulations.
  • That where piece rates are used, that they are formulated in line with the provisions of the Horticulture Award (clause 15.2) and that there is a proper, individual piecework agreement in place for each worker.

It is important to communicate with workers provided through contractors and monitor their progress. Ask them about pay and treatment and ensure they feel part of the whole workforce.

Beware of cheap rates

Before accepting a quote from a contractor, a grower must make sure that the numbers add up. The amount per hour per worker charged by the contractor must be enough to guarantee the workers their legal entitlements.

Generally, any quote under $30/hour for hourly paid Level 1 casual workers under the Horticulture Award should be treated with caution. The casual hourly award base rate is $24.80. On-costs including superannuation ($2.36) and workers’ compensation (around $0.45 depending on State) then need to be added – which totals $27.61 per hour. However, this still does not include any overheads or margin for the contractor, which also needs to be included in the total. Plus, if the contracting business is large enough to incur payroll tax (which many will be), this will add a further 2.4% to 6.1% depending on which state rate applies.

So if the price seems too good to be true, it probably is.

Labour hire licensing schemes

Labour hire licensing schemes now operate in Queensland, South Australia and Victoria in order to:

  • stop unfair competition in the industry
  • support responsible labour hire companies
  • protect workers from exploitation.

In these three states, ‘Host Employers’ (i.e. the grower) must only use licensed labour hire providers which will be listed on the official labour hire website of the relevant state government. The websites will also show which applications have been refused. If the contractor is based in a state where licensing is not required i.e. NSW, if they supply workers in a state where licensing is required the contractor must be licensed in the state where the workers are placed.

Before engaging a labour hire provider in Queensland, South Australia or Victoria, the grower should go to their relevant state website where they can find all the information they need.

StaffSure – states without licensing regimes

If engaging labour hire providers from states which do not have licensing regimes, growers are encouraged to check whether they are StaffSure accredited. Contractors who meet the StaffSure standard established by the Recruitment, Consulting and Staffing Association of Australia & NZ [RCSA) are more likely to be compliant and of lower risk to the grower. If no such certification exists, it is up to the grower to exercise due diligence to ensure that the contractor operates both legally and ethically.

Being well informed is the key message

These are difficult times and workers can be hard to find. However, just because the contractor provides the workers does not mean the grower has no responsibility for them. Engaging with dodgy contractors who may be supplying undocumented workers is fraught with risk.

Media reports during the past five years or more have frequently highlighted the activities of labour hire providers and contractors who defy the law. In each story that is published the grower is nearly always implicated, even when they can prove that the contractor was paid sufficiently to cover all worker costs.

In the event a complaint is made or an audit undertaken, growers who have not taken sufficient care leave themselves wide-open to prosecution, while the contractor may have disappeared into the wind. Despite labour shortages growers must seek out legitimate businesses to partner with to reduce the risk to their business.

So, get your ducks in a row – check on your contractor’s bona fides and get your agreement in place.

To check if your labour hire provider is licensed:

Queensland

https://www.labourhire.qld.gov.au/

South Australia

https://www.sa.gov.au/topics/business-and-trade/licensing/labour-hire/industries

Victoria

https://labourhireauthority.vic.gov.au/

Harvest Trail Information Service