A Labour Hire Agreement is a legally binding contract that governs the tripartite arrangement between a labour hire provider (the business that employs and supplies workers), a host employer (the business that engages workers from the provider and directs their work), and — indirectly — the workers themselves. In Australia, labour hire is a significant part of the workforce, particularly in construction, manufacturing, warehousing, hospitality, agriculture, and healthcare sectors.

Under Australian law, and following the reforms introduced by the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth), the employment relationship in a labour hire arrangement is between the provider and the worker, not between the host employer and the worker. This is codified in s15A of the Fair Work Act 2009 (Cth). The provider is responsible as the employer for all payroll, superannuation, PAYG withholding, workers' compensation insurance, and compliance with modern awards and the National Employment Standards.

Three Australian states — Queensland, Victoria, and South Australia — operate mandatory labour hire licensing schemes that require providers to hold a current licence before supplying workers. The Labour Hire Licensing Act 2017 (QLD), Labour Hire Licensing Act 2018 (VIC), and Labour Hire Licensing Act 2017 (SA) each impose licensing obligations on providers and corresponding obligations on host employers to verify that providers hold a valid licence. Hosting an unlicensed provider in these states is a strict-liability offence attracting substantial financial penalties.

This Australian Labour Hire Agreement template documents the commercial arrangements between the provider and the host employer, including the supply of workers, charge rates, payment terms, WHS responsibilities, workers' compensation obligations, and termination provisions. It is designed to comply with all applicable Commonwealth and state labour hire legislation.

A Labour Hire Agreement is needed whenever a business in Australia engages a labour hire company to supply workers to perform work under the business's direction and supervision. The agreement is a fundamental document that protects both the host employer and the provider by clearly documenting their respective rights and obligations.

You need a Labour Hire Agreement in the following situations: when a business in Queensland, Victoria, or South Australia engages a labour hire provider and must verify and document the provider's current licence number; when a manufacturing, warehouse, construction, or logistics business needs to engage casual or temporary workers through a staffing agency for a short-term project or to cover seasonal demand; when a hospital, aged care facility, or healthcare operator engages nursing or allied health staff through a healthcare staffing agency; when a hospitality or retail business uses a labour hire firm to staff events or peak trading periods; and when a business wants to clearly allocate WHS responsibilities, workers' compensation obligations, and payroll obligations between itself and the provider.

The agreement is equally important from the provider's perspective. It documents the agreed charge rates, payment terms, invoicing arrangements, and conversion fee provisions. Without a written agreement, disputes about responsibility for worker injuries, underpayment claims, unpaid invoices, and licensing compliance are significantly harder to resolve.

Following the 'same job, same pay' amendments effective 1 November 2024, host employers with enterprise agreements and labour hire providers should review their arrangements carefully to assess whether regulated labour hire arrangement orders may apply, and ensure their charge rates and employment contracts reflect any uplift in pay obligations.

A well-drafted Australian Labour Hire Agreement must address several key elements specific to the Australian regulatory environment.

Licence compliance provisions are mandatory for arrangements in Queensland, Victoria, and South Australia. The agreement must identify the provider's labour hire licence number and include warranties by the provider to maintain a current licence throughout the arrangement. The agreement should also require immediate notification to the host employer if the licence is suspended or cancelled, and give the host employer the right to terminate immediately in that event.

The employment relationship must be unambiguously documented. The agreement must state clearly that the workers are employed by the provider, not the host employer, and that the provider is responsible for all payroll, superannuation guarantee (currently 11.5% in 2024-25), PAYG withholding, payroll tax, and workers' compensation insurance. This protects the host employer from inadvertently becoming liable as the employer and from sham contracting or misclassification risks.

Work Health and Safety responsibilities require careful allocation. Both the provider and the host employer are PCBUs with concurrent duties under the Work Health and Safety Act 2011 (Cth) and applicable state legislation. The agreement should clearly define the host employer's day-to-day WHS obligations at the host site — including induction, training, supervision, and hazard management — and the provider's ongoing WHS monitoring and consultation obligations.

The charge rate structure must be transparent and cover all employment oncosts. The charge rate paid by the host employer to the provider must be sufficient to cover the worker's wage plus superannuation, payroll tax, workers' compensation insurance premiums, and the provider's margin. Disputes about charge rates are common in labour hire arrangements and are best avoided by clear drafting.

A conversion fee clause protects the provider's commercial interest. Where the host employer wishes to directly hire a placed worker, the agreement should specify the conversion fee payable to the provider or the minimum notice period required. This clause is commercially standard and generally enforceable under Australian law.