Labour Hire: What It Is, How It Works & What It Costs

By Mohammad Barzegar, Director, TQN Personnel · Reviewed by Mohammad Sakhvidi · Updated October 2026 · 12 min read

Labour hire is an arrangement where a labour hire agency employs workers and supplies them to a host business, which directs the daily work while the agency pays wages, super and entitlements. It suits employers who need flexible capacity and workers who want varied assignments. This guide explains how it works, who is responsible for what, how licensing differs by state and where to read next, and it covers the pay, safety and contract basics for both sides.

What is labour hire?

Labour hire is a three-party arrangement between a worker, a provider and a host business. The worker has a contract with the provider, and the provider has a commercial agreement with the host.

Employers also use the term to describe temporary staffing and, loosely, ways to outsource staff for peaks and projects. The legal position is the same: the provider is the employer.

Term	Meaning	Why it matters
Labour hire agency	The business that employs the workers and places them with hosts.	It is responsible for pay, super, leave and workers compensation insurance.
Host employer	The business that receives the workers and directs the tasks.	It shares safety duties and must provide site inductions.
Labour hire agreement	The commercial contract between the provider and the host.	It sets scope, rates, notice, insurance and incident responsibilities.
Placed worker	The employee supplied to the host, often on a casual or fixed-term contract.	The worker looks to the provider for pay and entitlements.
Regulated arrangement order	A Fair Work Commission order that can require the same pay as host employees in some cases.	It can lift pay for placed workers doing the same job as host staff.

Who labour hire applies to

The same model works across industries, but obligations differ by worker type and by state.

Situation	What applies
Casual placed worker	Paid by the provider with the 25% casual loading under most awards, and at least $33.05 per hour where no award applies.
Part-time or full-time placed worker	Paid by the provider at the award rate, with leave under the National Employment Standards.
Host employer	Directs the work, approves timesheets and shares work health and safety duties, but does not run payroll for placed workers.
Genuine contractor	Not an employee, but an ABN does not decide the question. Test the real relationship using Fair Work Ombudsman and ATO tools.
NSW state public sector employee	Covered by the NSW state system, so check which rules apply.

Sham contracting is illegal. Never label a worker as a contractor or casual to avoid obligations when the real relationship says otherwise.

Rates, pay and entitlements for hired labour

These figures apply from the dates shown. Award rates for each classification are in the Fair Work Ombudsman pay guide, so check it before quoting a rate.

Item	Figure	Applies from
National minimum wage, hourly	$26.44	First full pay period on or after 1 July 2026
National minimum wage, 38-hour week	$1,004.90	First full pay period on or after 1 July 2026
Casual minimum, hourly (includes 25% loading)	$33.05	First full pay period on or after 1 July 2026
Modern award minimum rates	Up 4.75%	First full pay period on or after 1 July 2026
Super guarantee	12% of ordinary time earnings	2026-27
Payday super	Reaches the fund within 7 business days of payday	1 July 2026
Payslips and records	Payslip within 1 working day of payday; records kept for 7 years	Current

How labour hire works step by step

The process is similar whichever provider you choose. A Monday-morning induction and a signed timesheet each week keep it running smoothly.

1. Send the provider a brief with the role, location, award, hours, tickets needed and site rules.
2. Review the shortlist and confirm the worker meets the inherent requirements of the job, using fair, non-discriminatory criteria.
3. Sign a written agreement covering scope, notice, insurance, safety responsibilities and any conversion terms.
4. Run the site induction, and check licences, tickets and any white card before work starts.
5. Direct the tasks, approve the timesheet each week and report any incident to the provider and SafeWork NSW where required.
6. Review the placement, then extend, change or end it using the notice in the agreement.

Worked example	What happens
Casual placed worker, no award	The base rate of $26.44 plus the 25% loading gives at least $33.05 per hour, paid by the provider for every hour worked.
Super on that wage	The provider adds 12% of ordinary time earnings on top, and it reaches the fund within 7 business days of payday.
Paperwork	The host signs the timesheet, the provider issues the payslip within 1 working day of payday and keeps records for 7 years.

Employer obligations for hired labour

Both parties have duties, and the agreement should say who does what.

• Pay at least the award, agreement or national rate for every hour, and issue payslips within 1 working day of payday.
• Pay super with wages so it reaches the worker's fund within 7 business days of payday.
• Report payroll information to the ATO on or before each payday through single touch payroll.
• Hold workers compensation insurance with icare and confirm the certificate with the host.
• Run site inductions, provide PPE and agree who reports incidents, since both parties are PCBUs.
• Check licensing in each state where the work happens, as Victoria, Queensland, South Australia and the ACT require it.
• Keep time and wage records for 7 years, including host-signed timesheets.

Hire licensing rules by state: what to check

Licensing is the area that most often catches employers out when work crosses a border. Read the full guide on labour hire licence Australia for the detail.

• NSW has no licensing scheme for providers (NSW Government, May 2026) and is working with other jurisdictions on a nationally consistent approach.
• Victoria, Queensland, South Australia and the ACT have licensing schemes.
• Victoria's expanded fit and proper person and financial viability rules started 1 June 2026.
• Newly covered South Australian providers had to hold a licence by 29 July 2026.
• Ask any provider for its licence details in every state where it will place workers.
• Keep a copy of each licence on file and check it again before every new placement, since a suspended licence can stop a job mid-assignment.
• Ask what the provider does if a licence is not renewed during an assignment, and who covers the cost of replacing workers at short notice.

Construction labour hire on NSW sites

Building sites are the biggest users of placed workers, and they carry the most risk. See our guide to construction labour hire.

• Check a white card before anyone enters an operational construction zone, because it is needed for construction work in NSW.
• Confirm licences and tickets for high-risk work separately, since the white card does not replace them.
• Run a site-specific induction on day one covering hazards, emergency procedures and reporting lines.
• Agree who supplies PPE and who investigates incidents, and put it in the agreement.
• Keep induction records and signed timesheets from the host supervisor, because they are the first documents asked for after an incident.
• Rostering workers across two sites in the same week needs a separate induction at each site, even for the same crew.

Hired labour for FIFO and remote rosters

Fly-in fly-out work combines placement with long distances and set rosters. Our FIFO meaning guide explains the terms.

• Check the roster pattern, accommodation and travel arrangements are in the contract before the worker accepts.
• Confirm which award or agreement applies, since penalty rates and allowances can differ from city work.
• Plan fatigue management and wellbeing support, as psychosocial hazards are higher on long rosters.
• Check licensing in the state where the site is located, not where the provider is based.
• Confirm how travel time, site allowances and meal breaks are paid, and where to find them in the Fair Work Ombudsman pay guide.

Hiring seasonal labour for peaks

Many employers use placed workers for seasonal peaks, such as harvest, events and the pre-Christmas rush. See seasonal work for planning tips.

• Book early, because lead times for inductions, tickets and checks can shorten the pool of available workers.
• Agree in advance how extensions and early finishes are handled.
• Plan for public holidays, since penalty rates come from the award or agreement and payroll cut-offs arrive early.
• Plan the induction for each new intake in one session, so a crew that starts together is ready on the same morning.
• Tell casuals about conversion rights, as a casual can notify they want to convert after 6 months, or 12 months with a small business employer.

Employer of record vs labour hire

An employer of record arrangement can look similar, but the roles differ. Compare it in our guide to employer of record.

• A provider supplies workers who do the host's work under the host's direction, with the provider as employer.
• An employer of record usually handles payroll and compliance for people the client has already chosen.
• Ask each model who carries the legal obligations and insurance before you commit.
• Check how each model treats licensing, particularly in Victoria and Queensland.
• Do not use any arrangement to avoid award or National Employment Standards entitlements, because the law looks at the real relationship.

Hire agency, temp agency and recruitment agency

The terms overlap, so be clear about what you are buying. Our guides to the temp agency model and how recruitment agencies work set out the differences.

• A hire agency or temp agency employs the worker and charges the host for their time.
• A recruitment agency finds a candidate for you to employ directly and normally charges a placement fee.
• Ask each provider to state in writing who the employer is.
• Compare what each charges and what it includes, because the cheapest rate can leave insurance, inductions or cover for absences to you (indicative — get quotes).
• Ask for references from hosts in your industry before you sign anything.

Common labour hire mistakes to avoid

• Treating placed workers as your own for pay decisions, when the provider is the employer.
• Assuming NSW rules apply to work in Victoria, Queensland, South Australia or the ACT.
• Skipping the site induction because the worker is only there for a few days.
• Relying on a verbal agreement instead of a written agreement.
• Leaving timesheets unsigned, which delays pay and invoices.
• Calling a worker a contractor to avoid costs, when the real relationship is employment.

Labour hire FAQ

What is labour hire?

It is where an agency employs workers and supplies them to a host business. The agency pays wages, super and entitlements, while the host directs the daily work and shares safety duties. It lets the host add capacity without taking on payroll.

Who is the employer of a labour hire worker?

The provider is the employer. It must pay at least the award or agreement rate, issue payslips within 1 working day of payday and pay super with wages. The host directs tasks and approves timesheets but does not run payroll.

Do you need a licence to run labour hire in NSW?

NSW has no labour hire licensing scheme. Victoria, Queensland, South Australia and the ACT do, and licensing depends on where the work happens. Check each state's regulator before placing workers outside NSW.

Is a labour hire agreement required?

You should have one in writing. It records scope, rates, notice, insurance, safety responsibilities and incident reporting. Have a lawyer review it, because it affects who carries risk if something goes wrong on site.

What do placed workers get paid?

At least the award or agreement rate, or $26.44 per hour for permanent award-free staff and $33.05 for casuals from the first full pay period on or after 1 July 2026. Some workers may get the same pay as host employees under a regulated order.

Can a placed worker become permanent?

Often yes, through a conversion arrangement in the agreement. A casual can also notify they want to convert after 6 months of employment, or 12 months with a small business employer, so ask the provider how conversion works before the placement starts.

Next step: use labour hire with confidence

Write down the role, the award and the dates, then compare providers on licensing, insurance and clarity of the agreement. At TQN Personnel, we supply screened, inducted workers across Sydney and can help you plan your next placement, or you can register for work. This is general information, not legal, tax or financial advice, so check the Fair Work Ombudsman, the ATO or an employment lawyer for your situation.

Related guides

• Labour hire licence Australia
• Construction labour hire
• FIFO meaning
• Seasonal work
• Employer of record
• How recruitment agencies work
• Temp agency guide