Planning a project using contractors? Here’s what you need to know.
Effectively resourcing your infrastructure project can be challenging and time consuming. For this reason, many project managers and HR professionals choose to utilise third party providers to manage the recruitment, management and payroll of their contract staff. But there is a lot more to choosing a labour hire company than meets the eye, and choosing the wrong provider could land you in hot water. So what do you need to know before you sign on the dotted line?
WHAT ARE THE RISKS?
When you’re hiring contract staff, you have to get your documentation right. If an employment relationship is not correctly characterised and defined, the Fair Work Commission may look at the triangular relationship between the on-hired worker, the Contractor Management Service and the host employer (that’s you) and make a decision on who is the true employer.
An unscrupulous Contractor Management Service can expose the host employer to future employment entitlement claims and outstanding legal obligations or associated penalties due to:
Incorrect engagement
- Non-complying company structures
- Poor OH&S training and inductions
- Insufficient ongoing worker management, and more
In addition, most Contractor Management Service providers have a ‘hold harmless’ clause in the event of a claim and will not indemnify the host employer against any employee entitlement claims or prosecution.
SO WHY ENGAGE ON-HIRED WORKERS?
Engaging on-hired workers through a third party provider can have significant benefits for your business and choosing a reputable organisation will assist you in reducing your employment risk.
To avoid the pitfalls of contingent employment, it is essential that the employment of on-hired workers is administered correctly.
Mitigating risk when using a third party provider
Organisations that appoint a significant number of on-hired workers, contractors and sole traders should take measures to manage employment risk and limit future liability claims against them, as these types of companies are most exposed to issues – but anyone using on-hired workers should know what they are getting into.
There are many ways to mitigate the risks involved (which include legal exposure as well as reputational risk), and engaging on-hired workers through a Workplace Management Provider (WMP) can mitigate such risk. A meaningful understanding of the evolving case law and the Fair Work Act, along with the differences between a WMP and a CMS is critical when partnering with the correct third party provider to meet your project requirements. We talk more about these differences in our information pack, which you can download free here.
Need-To-Know Info: On-Hired Workers
- On-hired workers (often referred to as casuals, temps or contractors) must be treated fairly and equitably by both the host employer and the third party provider.
- The employer has primary control of the on-hired worker. If you are using a third party provider, you should not treat an on-hired worker as your employee (e.g. performance management).
- Allowing the third party provider to do their job and manage on-hired workers will minimise any employer/employee relationship risk to your organisation and reinforce that the third party provider is the legal employer of the on-hired workers.
HOW CAN I AVOID RISK WHEN USING CONTRACTORS?
If you’d like to know more about the risks involved with on-hiring staff and how you can avoid them, we’ve put together an information pack, titled Avoiding the Common Pitfalls of Resourcing Projects, which you can download free.
It covers issues like sham contracting (a common and costly mistake), the types of labour hire agreements common in Australia and what to look out for when using contract staff.
To get your copy, just CLICK HERE.
