Labour hire work is characterised by a third-party arrangement, where there is:
- an employment relationship between an individual employee and a labour hire firm, and
- a commercial arrangement between the labour hire firm and another business for the supply of the individual employee's labour, for a fee.
The labour hire firm then pays the individual employee (the labour hire worker) their wage or salary. Labour hire workers are employees of a labour hire firm, rather than the firm that they are providing their labour to.
The multi-party nature of labour hire work makes it one of the more challenging arrangements to produce statistics on, compared with the more common employer-employee relationships and self-employment.
Business providing 'labour hire' employees
Businesses that provide labour hire services, and their employees, are classified to the ANZSIC 4-digit industry class of 'Labour supply services' (ANZSIC 7212). Labour supply services are in ANZSIC Division N (Administrative and support services), Subdivision 72 (Administrative services), Group 721 (Employment services). Businesses in Labour supply services are mainly engaged in supplying their own employees to clients' businesses on a fee or contract basis. Assignments are usually temporary and performed under the supervision of staff of the client unit, at the client’s work site.
Labour within businesses in the Labour supply services industry is different to most businesses, given the main activity is the provision of labour as a service to other businesses, rather than the use of labour within the business to produce goods and/or services.
While labour hire workers are employed in the Labour supply services industry, not all people working in Labour supply services are labour hire workers. This is because there are a small number of 'direct' employees of the labour hire firms that are also included within Labour supply services (e.g. administrative, managerial and support staff who work within the business itself, rather than provide contracted labour services through a third-party arrangement). This small number of direct employees in the industry cannot be separately identified in any available data, so are included within the estimates of labour hire workers in this release.
Business providing recruitment services
There are also businesses (often referred to as 'employment agencies') that are mainly engaged in listing employment vacancies and referring or placing (recruiting) applicants for employment with another business. The services are provided to either employers or potential employees, and include the formulation of job descriptions, the screening and testing of applicants and the investigation of references. Also included in this class are units that provide executive search services. These businesses (and their direct employees) are classified to ANZSIC 7211 ('Employment placement and recruitment services').
People with labour hire related working arrangements
People can have a number of differing relationships with labour hire firms, including:
- being registered with a labour hire firm
- having found their job their job through a labour hire firm
- for those who found their job through a labour hire firm, being paid by the labour hire firm
There are also people who found their job their job through a labour hire firm, but are not paid by the labour hire firm (e.g. through a business providing a recruitment serrice). These people are not employees of the labour hire firm, and are not employed in Labour supply services.