By Walter Scremin, CEO, Ontime Delivery Solutions
Smart companies which outsource tasks to suppliers need to ensure they aren’t on the wrong side of a ‘sleeper issue’ in subcontracting labour, which can potentially incur massive penalties both for individuals and companies.
There’s one particular detail which is easily overlooked yet must be accounted for when hiring people via an agency or other outsourced provider – ensuring the provider is licensed.
Engaging unlicenced labour hire workers is a sleeper issue because not all companies understand their responsibility. It’s a mistake to assume the responsibility lies solely with the labour provider.
All states have their own labour hire laws, and there are huge fines for breaches. According to the Labour Hire Authority in Victoria: Maximum penalties exceeding $600,000 for a corporation and $150,000 for an individual apply under the Act for providing labour hire services without a licence, or engaging unlicensed labour hire services (my emphasis).
The important point here is it’s not just the responsibility of the supplier providing the talent – it’s also your responsibility as a company hiring the labour. Any company engaging third party resources is therefore responsible for checking their providers are properly licensed.
The other potential trap for companies is thinking this may not apply to their sector or industry.
There’s a perception labour hire breaches are only an issue for industries like fruit picking or construction, due to media coverage. But the rules apply to any company outsourcing talent – whether its technology, professional services, marketing, or manufacturing.
Consider outsourcing to a sole operator, such as a web developer, marketing consultant, tech support or business advisor – if this supplier brings in some extra support, can you be sure these extra resources are covered under a labour hire license?
It’s a common risk in my industry of delivery transport. Anyone can buy a van and call themselves a transport solution. But business can be caught out when their regular driver brings in a brother, cousin, or a couple of friends to help – it’s a detail which is easy to overlook. But it’s up to us to ask: do you have a labour hire license?
To ensure compliance when engaging labour hire services, it’s best to ensure the appropriate licenses are in place to cover extra resources.
Other key questions to ask when outsourcing services
Outsourcing services is critical to running a smart company. Aside from compliance with labour hire requirements, how else can companies avoid making mistakes? Here are some key questions.
Are they compliant with the requirements of their industry? This depends on the industry involved. In the delivery transport sector, there are compliance issues such as ‘chain of responsibility’ to consider, which ensures accountability for safety across a supply chain.
It’s important to ensure you are not unwittingly breaching any other laws when your company engages this supplier.
Does the business case stack up? While not all outsourced services will deliver predictable KPIs, you need to at least understand the hole they are trying to fill. For example, transport is an area which is high cost. To outsource effectively you need to know exactly what your needs are and understand the genuine costs in full, and the headaches you are trying to solve, to measure the performance.
Will they start with a trial period? Committing to a lengthy contract or an intense engagement can be a big mistake if things don’t go so well. There’s always trust involved in an outsourced relationship, and you can’t be sure your provider will be able to look after you. Best start small and increase your engagement as your supplier proves themselves.
Can you work together? Committing to an outsourced solution is a bit like hiring employees – it’s best if you actually like them! Hence it’s worth taking a little time to get to know who you will be working with a little better before making the leap.
Finally, are we committing the biggest outsourcing mistake? The biggest outsourcing mistake is committing to a supplier based purely on price, rather than service. It’s amazing how going cheap can cost you in the long run, whether it’s due to insufficient professionalism or just plain incompetence.
It’s also important to remember that outsourcing isn’t just about improving your balance sheet, it has the potential to improve your business, and even grow your business by giving you access to resources under more flexible terms than if you hired them yourself. Rather than see it as a cost-saving opportunity, the smartest companies look for suppliers which will make them better.
Our friendly team is available to talk through all your outsourcing questions. Call us on 1300 132 367 or click here for more information on what’s included in our service, for one agreed-up-front, fixed price.
Written by Walter Scremin, Ontime Delivery Solutions CEO.