Small businesses that outsource tasks to suppliers need to ensure they aren’t on the wrong side of a ‘sleeper issue’ in subcontracting labour, which can potentially incur massive penalties both for individuals and companies.
There’s one particular detail that is easily overlooked yet must be accounted for when hiring people via an agency or other outsourced provider – ensuring the provider is licenced.
Engaging unlicenced labour-hire workers is a sleeper issue because not all companies understand their responsibility. It’s a mistake to assume the responsibility lies solely with the labour provider.
All states have their own labour-hire laws, and there are huge fines for breaches. According to the Labour Hire Authority in Victoria: Maximum penalties exceeding $600,000 for a corporation and $150,000 for an individual applying under the Act for providing labour-hire services without a licence or engaging in unlicenced labour-hire services.
The important point here is it’s not just the responsibility of the supplier providing the talent – it’s also your responsibility as a business hiring the labour. Any small business engaging third-party resources is therefore responsible for checking their providers are properly licenced.
The other potential trap for businesses is thinking this may not apply to their sector or industry. There’s a perception that labour-hire breaches are only an issue for industries like fruit picking or construction, due to media coverage. But the rules apply to any company outsourcing talent – whether it’s technology, professional services, marketing, or manufacturing.
Consider outsourcing to a sole operator, such as a web developer, marketing consultant, tech support or business advisor – if this supplier brings in some extra support, can you be sure these extra resources are covered under a labour-hire licence?
It’s a common risk in my industry of delivery transport. Anyone can buy a van and call themselves a transport solution. But business can be caught out when their regular driver brings in a brother, cousin, or a couple of friends to help – it’s a detail that is easy to overlook. But it’s up to us to ask: do you have a labour-hire licence?
To ensure compliance when engaging labour-hire services, it’s best to ensure the appropriate licences are in place when you commence.
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