Labour hire companies are nothing new, in fact, they have been around for a couple of decades now. It’s, therefore, quite surprising how many people do not know what they are and how they function. If you’re one of those people, then you have come to the right place as we will be dissecting the workings of these “recruitment-firms-with-additional-features” to give you a better understanding of what they are and how they work. And who knows, they might turn out to be exactly what you are looking for!

Defining labour hire companies: what are they?

Let’s start from the beginning: what are labour hire firms? Labour hire companies are labour provision entities that provide outsourced labour to organisations on a hire basis for either long-term or short-term positions, i.e. organisations “rent” workers from them. Workers hired from these companies go by different names including candidates, temps or on-hired staff.

Temps provided by labour hire firms are legally not considered your employees even though they work at your company, use your facilities and equipment, or even wear your uniform. These workers remain employees of the labour hire company that provides them to you. Your agency is, therefore, responsible for all employer obligations including remuneration, insurance, benefits and other employee entitlements.

How do labour hire companies work?

Labour hire companies work in a way that is quite similar to recruitment companies, the only difference being that labour hire candidates are retained on the agency’s database once they’re enlisted and called upon whenever assignments are available.

The first thing labour hire companies have to do is create a database from which they will be picking candidates from to send out to host employers. For this, they recruit just like a regular recruitment agency does. They first advertise for the roles to elicit interest from individuals with particular skill sets (depending on the industry they recruit for) that are looking for employment. Once candidates send in their applications, they are screened and vetted before being added to the labour hire firm’s worker database.

When a client requests for a worker with a certain type of skill, all the labour hire firm needs to do is check their database and find a worker that matches the specified criteria. Of course, they also need to ensure the worker they select will be able to integrate into the kind of work environment and corporate culture that’s at the host employer’s workplace for successful integration.

For more niche skillsets that are not available from the labour hire company’s database, the agency will use their extensive market knowledge and developed networks to source and recruit the kind of worker you need. And with their advanced recruitment processes, this usually does not take a lot of time.

Temp placement

Once a match has been found for your business, the labour hire firm sends out the temp to your premises as soon as possible – sometimes as soon as the next day. The worker will work at your company – under your management – until the assignment is complete.

Once the job is done, and the on-hired worker’s services are no longer required, all you need to do is to inform your labour hire company, and they will call back their candidate with no delays. As such, you only pay for the exact amount of time you need the temp for.

How much do labour hire agencies charge?

As mentioned earlier, the labour hire firm you get your temps from is responsible for payroll maintenance and remuneration of the workers – which includes insurance and benefits. As a result, host employers do not make direct payments to their on-hired workers. Instead, all payments are routed through the labour hire company which then pays the workers their wages.

How much more do you pay for workers when using labour hire agencies? The short answer is, not a lot more. Obviously, hiring workers through a labour hire agency will cost more than it would if you hired the employee directly, but not by a large margin. Usually, the labour hire firm you’re working with will add a small markup to the amount you pay for on-hired employees to cover the extra services made available by this sort of labour arrangement such as recruitment, payroll maintenance, insurance and the likes.

Who can use labour hire companies?

Generally, any business that requires labour can use labour hire companies to source for workers. Businesses that deal with projects or those whose labour requirements keep fluctuating will benefit the most from a labour hire arrangement. These include businesses in the mining, construction, manufacturing, hospitality and retail sectors among others.

With labour hire, you can easily and cost effectively bring in extra workers to help out when you have extra work and let them go as soon as your labour needs fall. This ensures that you maintain a lean workforce without the risk of having a worker shortfall.

Additionally, labour hire enables you to bring in specialists for specific projects without the need to enter into contracts or hire them permanently. This makes things easier for you as you won’t have to hire a person whose skills you won’t need after a couple of months. You will also not need to estimate how long you will need the specialist for – which can be difficult. Labour hire companies enable you to bring in specialists for the exact amount of time you require them and only pay for the time they work for you; nothing more, nothing less.

Benefits of using labour hire companies

Using a labour hire company for both your temporary and long-term labour needs will benefit your business in the following ways:

  1. Reduced employee-shortage related downtime. Labour hire firms provide quick cover for employee shortages ensuring your business is never understaffed for extended periods of time.
  2. Lower labour costs. You can keep your labour costs low (including the cost of recruiting) by using labour hire agencies to bring in employees when you need them. This way you don’t have to pay for idle capacity.
  3. Huge skills pool. A labour hire company is like a one-stop-shop for all your labour needs. You have an army of workers with various skills ready and willing to report for duty whenever you need them.
  4. No commitments. By utilising the services of a labour hire company, you have the freedom to increase or decrease the number of workers as you see fit. You do not have to keep on-hired workers for a specific amount of time.
  5. Spot-on recruitment. Labour hire companies specialise in sourcing workers and providing them to clients. As such, they’ve developed processes and efficiencies that help them do this effectively with minimum mistakes. Therefore, workers provided by a labour hire company are very likely to succeed at their job.

Labour hire companies and the services they offer have increasingly grown in popularity as many business owners and executives discover the benefits of using them. Now that you understand how they work, it might be a good idea to evaluate your situation next time you need to hire and see if they can be useful for your circumstances. They might turn out to be just what the doctor ordered!

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