3 Ways to Mitigate Risk in Your Contingent Workforce Program

Contingent talent is one of the fastest growing segments of the contemporary workforce, accounting for up to 30% of total employees.

Given the complexities of engaging and managing a diverse contingent workforce, organisations are re-evaluating the tools and processes they use to attract and manage these resources so they can maximise productivity, while minimising compliance challenges and associated risks. As with any engagement model, unless it is implemented correctly, a number of significant risks that have financial, reputational and operational consequences may need to be addressed and mitigated.

CXC has a comprehensive understanding of contractor risk management in the Australian and New Zealand markets, having worked in contingent workforce management for over 30 years. In this blog, we’ve outlined a number of typical risks we see in contingent workforce programs, and how we ensure contingent workforce compliance.

contractor risk management

Noncompliance in your supply chain, leading to financial and reputational risk

As the demand for contingent workers increases, organisations are faced with new challenges and risks that are becoming ever more complex.

Many organisations source and payroll contingent workers through various recruitment suppliers. This means they have no visibility over their workforce as well as their risk exposure. Often, this situation leads to inconsistencies when interpreting law and contractor experience.

With this decentralised model, we’ve seen organisations exposed to:

  • Clients engaging recruitment suppliers who, without the client’s knowledge, were subcontracting the contingent workers through third party non-compliant providers (e.g., Plutus Payroll).
  • Recruitment suppliers interpreting industry awards differently, resulting in workers carrying out the same work but being paid different rates of pay.
  • Contingent workers who have finished in the organisation still accessing client systems, leading to data security risk.
  • Suppliers not having the right level or adequate insurances.
  • Suppliers misclassifying the employment engagement type of the worker.
  • Labour hire licensing breaches, where recruitment suppliers are not licensed.
  • Engagement of workers under company structures without the adequate insurances or compliance to other key requirements such as health and safety.

Risk mitigation

CXC’s contingent workforce compliance and risk framework ensures our clients and their contingent workers are protected from ever-changing statutory and emerging risks.

Our contingent workforce management model means only one provider is engaging, managing and paying your workers. This creates greater consistency and risk mitigation across both your contractors and suppliers.

CXC employs seven in-house staff with a high level of expertise in the obligations that are required to be a licensed labour hire provider, including WHS, Fair Work obligations and immigration requirements. We also engage with external experts, who provide advice on the formulation of our policies and procedures, including PricewaterhouseCoopers, AI Group, the RCSA and FCB Lawyers.

Ensuring contractor risk management around health and safety

Under the Work Health and Safety Act, the host employer has a responsibility to ensure the health and safety of contractors so far as is reasonably practicable.

A large percentage of organisations in the white-collar space do not have a proactive policy in place for contractors. However, significant penalties can be incurred if a labour hire organisation or employer does not ensure a safe working environment.

We’ve recently written a blog post about the risk exposure many organisations experience. Did you know that:

  • The rate of fatalities among contractors is twice the average of all workers.
  • Needle injuries among contracted nurses was 1.65 times higher than the rate for permanent nurses.
  • 19% of day labourers required medical attention in the course of a year, compared with 6% of all workers in construction.
  • Contractors working in mines had a higher likelihood of contracting pneumoconiosis than non-contract mine workers.

Risk mitigation

CXC provides the framework for the management of WHS responsibilities and risks in the area of operations under our and the contractor’s control and ensuring legal compliance in respect of the lodgement of all workplace health and safety incidents.

CXC’s onboarding involves a WHS declaration, which is an online, location-based risk assessment tool that the contractor must complete and submit. The submission is reviewed, assessed and, where required, clarified with the contractor. During implementation, we review the data you provide to CXC about the work sites and roles that are likely to be prevalent in your contingent workforce to ensure that our WHS approach effectively manages risks.

Additionally, CXC partners with Konekt to enhance our in-house expertise by providing overall guidance and day-to-day involvement in workers’ compensation claim management.

Ensuring data security and privacy

With technology constantly evolving, so are the security risks if they are not properly addressed. Organisations without a strategic data security program in place are often subject to routine breaches in security standards and loss of intellectual property.

The implementation of the notifiable data breaches under Australian law requires organisations to track and report any significant data breaches that expose the personal details of contractors both to affected parties and the Office of the Information Commissioner. Fines can be as high as $2.1 million for a corporate.

Risk mitigation

Three years ago, CXC moved from our legacy contractor management system to a custom-built technology based on a Salesforce platform. A key selection criterion when moving to Salesforce was data security, which was a compelling feature of Salesforce.

CXC currently partners with a Platinum Salesforce Partner to periodically undertake configuration, code and security permissions reviews. This enables CXC to ensure we continue a best-practice approach to our build while staying current with the latest innovations and releases across the platform.

We conduct a 3rd party audit every two years. We use external parties to test our data security, and our findings are incorporated in our 24-month rolling plan to futureproof our organisation against emerging risks. CXC also conducts a self-audit on an annual basis.

Read our a recent case study, on how we mitigating the PageUp data breach.

As one of the world’s top suppliers of contingent worker management solutionsCXC is perfectly positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across 5 continents, and with decades of experience, we can assist with every aspect of your program.

If you would like to find out more about how we can help with your contingent workforce solutions please contact us.