It’s a jungle out there – The contingent labour regulatory landscape
Your business may understand the risks associated with underpaying, overworking or failing to document your permanent staff, but does it understand the same risks for contractors? In many cases, what constitutes a breach of regulations – and the penalties for a breach – can differ significantly between permanent and contingent workforces.
Regulations and penalties around contingent work are generally far stricter than for permanent employment. There are complexities around who holds insurances, who needs to provide work cover and who pays payroll tax among other things?
Newly initiated labour-hire licensing schemes in several states stipulate fines in the hundreds of thousands of dollars for not only operating as an unlicensed labour-hire provider but also for clients of unlicensed providers (recruitment agencies without a license).
As a result of this complex legal landscape, nearly all corporations in Australia with contingent workforces outsource contractor management to a specialist company. It’s simply too risky for businesses in Australia to go into contingent labour blind – they universally need a guide and a strategy.
Two ways to manage your contractors
So what is a business to do? Broadly, there are two options for businesses looking for support in managing their contingent workforce:
- Full-service recruitment firms with candidate supply capabilities, and/or
- In-house talent acquisition with outsourced contractor payroll management.
Both options have their strengths and weaknesses, and these broadly track with other industries offering fully outsourced or hybrid solutions such as IT with cloud computing vs SaaS.
A full-service recruitment firm takes the issue away for you completely, minimising your administrative load to nearly nothing but also abstracting you away from the candidate selection process. For certain businesses, this is ideal, and the arm’s length approach to recruitment does not make a significant difference for their operations. It does, however, mean, that you need to ensure your recruitment partner has the necessary skills and technology to ensure the process is smooth for you as the Client.
Your recruitment partners can also work with CMOs like Oncore to ensure their back-office function is 100% and you reap the benefits
For others seeking greater control over who they bring on board, keeping talent acquisition in-house allows more stringent vetting. During the search for the appropriate candidate, an outsourced payroll management company is waiting in the wings to meet them during the onboarding stage, registering them into a database and making it easy to refer to current agreements and contracts at a moment’s notice. Some organisations also provide WH&S inductions, helping to further minimise your exposure to risk.