​LGIS has seen an increase in member claims relating to labour hire contractors. It's vital that members understand the risks involved with labour hire agreements.

Flexible work has been a landslide shift in the Australian workplace. There are many benefits for employers and employees alike. Local governments, like many organisations, have evolved to take advantage of the benefits that flexible work offers – particularly labour hire arrangements. They're becoming more important for local governments (LGs) in Australia and this trend shows no sign of slowing.

Using labour hire offers practical benefits by providing expertise on a short-term basis, filling staffing gaps or potential savings. However, it is crucial for LG host employers to understand their responsibilities towards labour hire staff and effectively manage the risks associated with this relationship.

Shifting risk

While labour hire arrangements offer significant advantages, the shift away from 'traditional' employment has meant that workplace injury claims are no longer the exclusive domain of workers' compensation.

The regulatory landscape governing labour hire arrangements has also undergone significant refinement with the introduction of the Work Health and Safety Act 2020 (WA) in 2022. This legislation has expanded the duties and responsibilities of host employers while imposing restrictions on their ability to delegate or contract out of their duties towards hired staff.

As 'host employers' LGIS members often assume unrecognised risk, responsibilities, and obligations.

When negotiating and managing labour hire arrangements, it is important to consider two categories of risks:

• Injuries to the workers

This includes liabilities for injuries to the workers themselves, such as workers' compensation, work safety and health legislation, and common law liabilities. These duties cannot be delegated.

• Third party liabilities

This involves liabilities owed to third parties because of the actions of labour hire workers. The extent of liability will depend on the relationship and level of control of the host employer and the worker.

But they're not our employees…

It's a myth that labour hire employees are the sole responsibility of the labour hire employer. The reality is that the host employer bears a similar, if not greater, responsibility for their well-being.

It's true that labour hire arrangement reduces the administrative burden of employment – it's the labour hire company that remains responsible for employment issues such as worker wages, tax, workers' compensation insurance, superannuation and leave entitlements.

BUT, the host employer, aka the local government, still owes a duty of care. The same duty owed to all employees to provide a safe workplace and proactively identify and manage risks – both physical and psychological.

In cases where workplace injuries occur, the first recourse is usually through workers' compensation legislation. However, if a worker is not eligible for workers' compensation or their injuries are significant, they may seek remedies through common law damages. It's important to note that common law liability can provide broader compensation than what is available under workers' compensation legislation.

Support for members

LGIS will shortly release our guidebook for local government 'Labour Hire Risk'. Developed in conjunction with legal partners DLA Piper the guide provides members with an overview of the risks and suggest practical steps to mitigate those risks.

For advice on providing a safe working environment and managing labour hire risks talk to the LGIS Risk Team at admin@lgiswa.com.au