Reducting Labour Hire Costs – Top 10 Tips

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Reducting Labour Hire Costs – Top 10 Tips

10 Top tips for ‘host’ employers and principals

1. Safety first and foremost.

Whether your workforce is made up of direct employees, contractors or labour hire workers, safety must always be a number one priority at any workplace. Appropriate risk management frameworks must be constantly identified, revised, documented and implemented to ensure all workplace risks and accidents are kept to a minimum.

2. Educate your staff on labour hire & contractor risks.

Information and training, on a host employer’s significant responsibilities when it come to safety and labour hire in the workplace particularly for supervisors, safety officers and leaders within an organization, should be a top concern.

The incorrect perception that host employers are ‘protected’ from labour hire worker injury claims because they are not their direct employees is all too common and may lead to a relaxation of safety standards and risk management practices. You must ensure that all reasonable care is taken to provide labour hire workers with the same safe place of work, safe system of work and safe plant and equipment you are obliged to provide to your own employees.

3. Ensure contract terms are documented, agreed to and stored.

Written contracts, signed and dated, provide a fundamental safeguard which helps ensure each party understands their respective rights and obligations. They also form key evidence necessary to prove those agreed responsibilities, should there be a claim. A failure to keep copies of relevant documents, particularly labour hire and other contracts with associated documentation, can prove fatal to any claim defence.

4. Negotiate a written indemnity clause.

A written indemnity clause which states that regardless of fault the parties agree to shift your liability for any claim onto another (such as the labour hire company), is a critical risk management tool. These clauses are specifically designed so that one party agrees to indemnify the other for the liabilities they incur in certain circumstances. If such a promise can be negotiated, a contractual indemnity clause in your favour is an obvious, and often the most effective, means of transferring risk onto your labour hire employer or a subcontractor.

However: These promises are often difficult to negotiate given the respective bargaining power of the parties. Even if you can agree to include one in your contract, these promises are often looked at with ‘hostility’ by the courts and interpreted narrowly if they are in any way ambiguous or unclear in their meaning. It is therefore recommended that legal advice is obtained in regard to their expression and validity.

5. Avoid agreeing to an indemnity clause in another’s favour.

The converse is also true. If possible, avoid agreeing to any indemnity clause or other contractual provision that attempts to shift the labour hire company’s or contractor’s liabilities onto you in the event of a claim. To agree to such a clause may jeopardise your cover under your liability insurance.

6. Negotiate other contractual terms relating to a labour hire worker’s fitness and capacity.

Apart from indemnity provisions, contractual terms which state that the labour hire company warrants the fitness of the workers provided and their capacity and training to do the job required are important. In the absence of an express contractual provision, the law will not impose an obligation on a labour hire company to warrant the fitness of the workers provided to you.

So if you have a large labour hire workforce it may be cost beneficial to have those workers medically assessed, particularly if it is a longer term engagement or one involving heavier physical activity. Otherwise, having a written term in your labour hire agreement warranting the fitness of the workers provided will give you some comfort.

Equally, a contractual description of the type of worker required and a warranty by the labour hire company of their capacity to carry out the required tasks will also assist, particularly if the worker was injured whilst carrying out a task within the area of their experience and expertise.

7. Encourage the labour hire company to take on more responsibility for safety.

Consider negotiating for the labour hire company to agree to take on other obligations for the safety of its workers.

For instance, it may be beneficial in some circumstances to have the labour hire company agree to undertake tasks relevant to maintaining workplace health and safety at your worksite, or supervision of their workers within your workplace. In the event that something goes wrong, this could potentially strengthen your argument that a greater apportionment of liability should be borne by the labour hire company.

However, this is not a step to be taken lightly and you must be confident not only that it will assist in your safety management, but that the tasks assigned to the labour hire company are within their capacity to address and can be adequately resourced.

8. Act on any risk reports or safety issues raised by the labour hire company.

Labour hire company inspections of ‘host’ worksites, coupled with open and regular dialogue on health and safety issues can only improve the safety and wellbeing of workers and reduce exposures. In addition, should a workplace accident occur, involvement by the labour hire company in safety issues (particularly with shorter term assignments) can potentially assist you defend a later claim by the injured worker.

However you need to ensure that any risk reports or issues raised by the labour hire company, either in writing or otherwise, regarding the safety of their workers is appropriately considered and actioned.

The steps taken by you in response should be documented. You should maintain your own register documenting when and where inspections and discussions with the labour hire company take place, the individuals present, what was observed and discussed, and the course of action taken by them in response. Formal feedback and communication channels between you and labour hire companies should also be established and encouraged.

9. Ensure you have in place appropriate liability coverage.

Workers’ compensation insurance will not respond to labour hire or contractor injury claims. Your liability coverage will need to be read carefully and in conjunction with the labour hire or contractor agreement so that contractual liability exclusions are not brought into play to restrict cover.

10. Ensure risk management practices are implemented in the event of an accident.

Should a workplace accident involving a labour hire worker or contractor occur, it is important that you have risk management protocols (including the completion of incident reports, retention of worker and witness details, collation and preservation of evidence such as photos or storage of damaged equipment) that are communicated, accessible and implemented.

Copies of all contractual documentation relevant to the injured worker/contractor, evidence of the task being completed at the time of the accident and the labour hire or contractual arrangements entered into by you are crucial, and should be complete and easily accessible in the event of a claim.

Source : Barry & Nilsson Lawyers

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