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Could you imagine the headline: [YOUR company name here] caught up in wage theft scandal!!
Remember these businesses that made headlines:
Or on a smaller yet completely relatable level:
Unless you are using a staffing agency that is fully compliant with their legal obligations as an employer, the risk to your organisation is high.
Do you conduct due diligence on your event staffing agency to ensure they are compliant with employment laws? Not sure what questions to ask?
Let us break it down.
1. Do they pay their workforce as employees or contractors?
If they pay their staff as contractors they may be engaging in ‘sham contracting.’ Sham contracting arrangements are sometimes set up by employers at the time of entering into a contract to try to avoid the responsibility for paying legal entitlements to employees. More about sham contracting here on the FairWork website.
Those legal entitlements specifically are Work Cover insurance, withholding tax and superannuation.
If an agency is paying their staff as casual employees, by law they generally must:
- Have Work Cover insurance in each state that they provide staff
- Withhold tax from staff payments
- Pay superannuation ON TOP of their hourly rate
- Pay them minimum hourly rates as dictated by Federal Awards
- Pay staff regularly – generally either weekly or fortnightly
- Pay staff penalty rates on weekends and outside of standard hours
If an agency is paying their staff as contractors they may not be doing any of the above and predominantly may not be covering their insurances and may be underpaying them.
2. If they are providing staff in VIC, QLD, SA or ACT, do they hold a labour hire licence?
A labour hire provider is a business that has an arrangement in place with one or more individuals to supply the individuals to perform work in and as part of a host’s business or undertaking and is obliged to pay the individual for the work performed for the host.
Staffing agencies often fall into this category and as such, may require a labour hire licence.
Some labour hire providers needs to hold a licence if they want to operate in VIC, QLD, SA & ACT. These are the only 4 states that have labour hire laws at the time of writing.
While the licences differ across states they generally assess:
- If the staff are paid as employees or contractors (to avoid sham contracting). More about that here.
- If the company has Work Cover policies in all the states they operate (these policies are state based).
- Does the company pay staff as per the requirements in a Federal Award
- Is the company meeting their superannuation obligations
So if an agency holds a labour hire licence you can be reasonably confident they are compliant in that state.
More information below about each state’s labour hire licensing:
What will happen if I use an unlicensed labour hire provider?
In VIC you face penalties exceeding:
$150,000 for an individual
$600,000 for a corporation.
Corporation – $431,250 (3000 penalty units).
Individual – $148,638 (1034 penalty units or three years imprisonment).
And in ACT, if you use labour hire services from an unlicensed provider you may face regulatory action, with the maximum infringeable penalty for a corporation being $2,430,000.
How can I check if my agency holds a labour hire licence?
You can easily check on public registers listed below:
What are some red flags?
If your agency is charging you a flat rate 7 days per week they are likely paying their staff as contractors, which in our industry, is potentially sham contracting i.e illegal.
If your agency is advertising seriously cheap hourly rates they are likely either:
- Not complying with their legal obligations to staff
- Running an unprofitable business model. This is obviously a concern in the long term.
What about Black Diamond Agency?
For the record Black Diamond Agency currently:
- Has labour hire licences in QLD, VIC & ACT
- Has work Cover policies in NSW, VIC, QLD, ACT, WA, SA & TAS
- Has national public liability insurance
- Pays our workforce as casual employees under the Retail, Miscellaneous and Hospitality Awards
- Pays our staff fortnightly
- Withholds tax from staff pay as per ATO requirements
- Pays staff superannuation ON TOP of their hourly rate
All the above comes at a large cost of doing business and is why we charge premium rates.
We are also only interested in working with companies who care as much about employment rights as we do. If you’re the type of business who will put budget before your people & our people, then we unfortunately are not the right fit for you.
We can provide all of our licences and insurances on request.
Who wrote this article?
I’m Tamara Haddow, Founder and Managing Director of Black Diamond Agency. I have been in the promo industry for 18 years and have been running the agency for 13 of those years.
I have a Bachelor of Social Science (Criminal Justice) and a Master of Commerce (specialising in Business Law & Financial Planning) and while these degrees don’t make me a lawyer, I am knowledgeable about employee rights in our industry (and incredibly passionate about them!) I want staff and clients in the industry be armed with this knowledge so we can put a stop to agencies ripping people off.
Please note that the above commentary is general in nature and you should contact your accountant/lawyer/FairWork/ATO if you need advice on your specific business circumstances.
I’m completely contactable by anyone who wants more information about what’s been discussed above.
Don’t be a stranger – firstname.lastname@example.org
Also, we believe in educating our employees and those in the industry so we wrote a blog to educate our staff from their perspective so they know when they are being ripped off by other agencies. If you want to read it, you’ll find it here.