​LGIS has recently seen an increase in both the number and cost of claims relating to labour hire contractors driven by increased use of outsourced labour.

Labour hire arrangements carry both a civil and statutory exposure. It is vital that members understand the risks involved with labour hire agreements and the practical steps you can take to minimise these risks.

Step 1: Do your due diligence

Before entering into a labour hire agreement, consider the tasks and skills necessary. Engage only qualified contractors with the appropriate qualifications. Ensure the labour hire provider is financially stable and has adequate insurance coverage (e.g: workers' compensation, public liability, professional indemnity) to reduce reliance on the provider's financial capacity to meet their liabilities.  

Step 2: Get the contract right

Members often risk not clearly defining the roles, rights, and obligations of both themselves (the host) and the labour hire employer. Though some terms can't be negotiated, it's important to consider and clearly articulate each parties' obligations in relation to:

1. Conducting risk assessments before employees start.
2. Ensuring employees are trained and qualified for host work.
3. Maintaining a safe workplace for employees.
4. Conducting periodic workplace inspections at convenient times.
5. Consulting with the host on employee safety and health.
6. Providing personal protective equipment at the host's workplace.

Members should seek legal advice before signing agreements with labour hire providers to avoid unnecessary costs if an injury occurs. Labour hire companies have standard agreements that may not best protect your interests. 

Furthermore, include indemnities to cover your liabilities for injuries or damages sustained by labour hire employees or liabilities to third parties.

Avoid agreements that indemnify labour hire agencies. Any liability incurred solely from such indemnities generally won't be covered by LGIS Liability.

 Familiarise yourself with these limitations of indemnity clauses:

1. They don't cover work health and safety fines.
2. They're only effective if the indemnifying party can meet the liability. If the labour hire agency lacks insurance or assets, or ceases operations, the indemnity may be ineffective.
3. They can't bypass Workers Compensation and Injury Management Act 2023 (WA) obligations.

Step 3: Talk to the labour hire employer

Provide detailed worksite information and invite the labour hire employer to inspect the site and raise safety concerns. Discuss any specialised equipment, including personal protective equipment. 

Step 4: Before the job starts

1. Verify the workers' certifications and keep copies of them.
2. Provide workplace safety protocols and a site induction, including a tour and hazard identification.
3. Continue consulting with the worker about safety hazards, involving them in regular job hazard analyses and safety meetings. 

Step 5: Monitoring and supervision

Ensure labour hire workers are supervised by trained personnel who can guide them on safe working methods.

Risk is a part of labour hire, but you can take practical steps to protect all parties involved. The Labour Hire Risk Management Guide, developed in conjunction with legal partners DLA Piper, provides practical guidance on how to mitigate these risks and ensure a safe and compliant workplace.

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