Contingent workforce compliance is a major issues in today’s workforce. With constant workforce changes taking place, the rise of contingent workers calls for a new approach to managing risk.
Following the overwhelmingly popular Emerging Workforce Summit which we hosted earlier in the year, last week, we brought back the risk and compliance panel to answer the burning questions around worker engagement and legislative change.
Co-hosted with Deloitte in their Melbourne headquarters, the expert panel provided insights into managing risk in the future of work for attendees to apply to their contingent workforces..
Our speakers at this event:
Here are the key insights from this event:
When organisations have contingent labour in their workforce, what do HR, Procurement and business leaders need to be aware of from a regulatory perspective?
- Where the organisation is utilising a staffing or labour hire firm, contingent workforce compliance and risk need to be mitigated across two tiers
- Not only does the organisation have a liability in relation to the workers that are being assigned by the third-party firm, they also have an obligation to do due diligence on the firm itself
- In this regard, if you’re in HR or procurement, you need to be very careful about your procurement policies, and who you select to supply you with those services
- Given labour hire laws are different in each state, this can represent a challenge for national organisations, who need to keep up with different laws in each state: a challenge the market is trying to keep up with at the moment
- From a regulatory standpoint, it’s messy
- Assuming your due diligence is water-tight because you’ve engaged a licensed provider is risky, and has failed organisations in the past: the checks need to be on those firms as well
- Don’t be lured into a false sense of security: be vigilant about putting the right checks in place at all stages of the talent supply chain
The Contingent Worker Relationship: what are some of the pitfalls and strategies used to compliantly manage them?
- Getting the advice your business needs is essential. Contingent workforce compliance advice is increasingly specialist. However, advice will save you time, money and reputational damage, especially if you have a complex workforce structure, multiple worker types in your business, and multiple engagement structures in place
- Compliance considerations are at multiple stages: how you contract contingent labour (from a third party, or directly); how you monitor that relationship; and how you end it. Remember, this is completely different from the average employment relationship – which is particularly important for large-scale users and suppliers of contingent labour solutions
- A key market challenge today, is that users of contingent labour, in their day-to-day operations, there’s often a desire to make those workers not visible: because the business doesn’t want to appear to have increased headcount. And, typically, it’s desirable for different business users to be autonomous. The problem when you disaggregate the engagement of contingent labour, the safety checks tend to fall away
- The ideal solution to this problem is to have a strong, centralised recruitment and HR function, with good advisors behind it, who are trusted by the organisation to filter through with efficiency, how contingent labour is engaged
The conundrum of business TALENT needS whilst keeping up with regulations:
- It takes time and investment to ensure you’re contingent workforce compliance is up to scratch
- Not only the labour themselves, but the suppliers and third-party managers of the labour
- Compliance with the law always wins in terms of priority – including keeping labour hire commissioners happy – but you must be mindful of not letting go of what your organisation actually needs: what’s fit-for-purpose for your business?
- You can’t take your eye off the ball when it comes to what your organisation needs, what do we need to check, are people being paid fairly, are they doing too much unpaid overtime… no matter what industry you’re in, these risks remain in place – look at the Colambaris situation
Providers of contract services:
- The safe assumption is, if any party that supplies workers to your business, they must be licensed under the Queensland and Victorian labour hire licensing scheme – unless your lawyers deem that they’re not required to be licenced
- Given the size of the penalties and the implications for getting this wrong, the investment for getting it right, is more than worth it
Critical checks organisations need to undertake across their labour supply-chain:
- Delineate responsibilities for whom the labour force is contracted: who bears the ultimate responsibility for them?
- Ensuring you spell out the expectations with your third-party suppliers: are they contractors? Are they direct contingent workforce hires? Are they engaged by another third-party? What type of labour are they providing? What’s the contractual responsibility of the supplier? Is there indemnity? Your contingent workforce compliance will rest upon all of these issues
- Health & safety of the contracted labour: this is not just a blue-collar issue. Consider issues such as are those workers bullied, or sexually harassed? Are they bullying or sexually harassing others? The responsibility for practical reasons, cannot rest with the supplier
- A lot of contingent workers here fall through the gaps of normal induction and on-boarding, in particular around behavioural expectations. If you consider the length of projects in some organisations – often years – the volume of workers falling through the cracks can be massive
- If organisations aren’t picking up on this, it can turn into a major issue
- There needs to be some level of aggregation within organisations regarding who is focusing on contingent labour. Because if different business units are calling for contingent workers, and they don’t want these workers to be visible to the business because of a hiring freeze – then the risks ramp up. There’s no visibility of the this segment of the labour-force, and the contingent workforce compliance is put in jeopardy
You can’t outsource risk
- Contingent labour needs to be inducted in the same way as permanent employees. They need to be integrated into the workforce, and even if they’re only in the business for a short period, perhaps there’s a truncated or different way in which you might do that
- The organisation needs to take responsibility for the risk, and so does the worker – for example, complying with the contingent labour contract for example, in the use of social media, and not bringing the employer into disrepute
- The issue is, with labour hire, contracted or third-party supplied labour, these risks are more pronounced
Today’s start-up culture
- In staffing, online talent platforms, labour suppliers – start-ups in this space are prolific. The number of suppliers coming into the industry offering a solution, is mindblowing
- Their websites look slick, their branding is fancy – but it’s important for organisations to determine what’s behind those organisations? Are the compliant? Are the licensed providers?
- If they are licensed providers, don’t think this is your ‘get out of jail free’ card, because if they’re operating in a way that isn’t compliant, you as the employer, will remain accountable
- Under accessorial liability laws, even though these new shiny providers have a licence, say they’ve been underpaying workers…. that’s YOUR responsibility as the employer or client organisation
- In summary be careful about the organisations you engage from this corner of the market – not all that glitters is gold
Procurement’s role in the supply of contingent labour
- Procurement are considered to have a ‘costs’ focus, keeping costs to a minimum for greatest value
- Cutting the cost of labour however, is difficult as there’s not much excess to cut before you start looking at wages, overtime payments, health & safety obligations and the like
- So if you’re in HR, you’re likely to be procuring services for labour as well. The problem is, procurement and HR typically take a very different path in the organisation, with vastly different skillsets
- The issues often start, at the supplier price-point and the pressure procurement are willing to administer
- Where they must unite is where both parties need to be cognisant of contingent labour contract provisions
Contingent labour is here to stay…
- … and so you need to take on these recommendations to remain compliant. There’s no set-and-forget option here
- Greater due diligence of the supplier; work with them around how they engage and manage the contingent workers; how are they managing expectations; continue to look at tenure, output – revise contracts and workers on a consistent schedule
- If you’re seeking to make changes to the arrangements with your contractors, get the right advice. Consider workers who may be casual – who have been in the business for a long time – and who may be wrongly classified. The best solution to get the business out of hot water is to get advice
- The commercial reality of the relationships are crucial to all parties in the supply chain: including (but not limited to) the contingent workforce management supplier, the talent supplier, the on-hire supplier, the legal advisor, the online talent platform, the industry associations
If you’re based in Sydney, you won’t miss out. We’re running the same panel, co-hosted with Deloitte, in Sydney on the 4th of September. To register, click here. Seats for these events fill quickly, so book yours today.