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Labour Hire VS Recruitment

News Article from Tuesday 30th January 2018

When looking for new team members the task of doing so can be daunting for some businesses. This is where a labour hire company or permanent recruitment firm will be an incredibly beneficial option for all involved. 

But how do you know if it's labour hire or permanent recruitment you are after? 

What's the difference anyway?

Let's start with what is the same. Both methods follow a similar process to link up ready and willing workers with companies seeking labour. 

However the outcome for each is very different. 

Permanent Recruitment

When businesses approach a recruitment company they serve as a match making service connecting candidates seeking employment with employers looking for workers. 

Where some larger companies will handle this within the HR department, many businesses choose to outsource the recruitment to a recruitment firm primarily to save time and money. The process of hiring a new employee is not only long but expensive too. When you employ the services of a recruitment firm, you are basically farming out the recruitment function and utilising the recruitment firm’s database to get the best worker to fill a vacancy.

The process of working with a recruitment company is fairly straight forward and looks something like this;

  • Employers identify a vacancy, register it along with a detailed job description and confirmation for the recruitment company to proceed. 
  • The recruitment company then markets the position to their candidate database and identify individuals that best meet the client’s criteria and draw up a shortlist. If the skill sets are not available from their database, they’ll advertise and evaluate candidates for that particular position.
  • The client is then handed the best matching CVs for a final selection after which the agency will arrange and coordinate the final interviews.
  • The selected candidate is then inducted into the client’s company as a “direct” employee on the company’s payroll.

Once accepted by the client company, the candidate provided by the recruitment company becomes a full employee of the client company which is responsible for paying wages, entitlements and managing them henceforth.


A finder’s fee is paid to the recruiting agency, and their relationship with the candidate generally ends there.

Labour Hire 

Labour Hire recruitment follows the same initial process as mentioned above for recruitment. However, unlike in the recruitment process that completely hands over the worker, labour hire firms provide workers through a ‘labour hire’ agreement.

This means the candidate recruited is provided to the client company either for short term or long term positions, but are not employees. 

The labour is hired out to them - hence labour hire. Thus worker wages and entitlements including insurance covers fall into the realm of the labour hire firm. They are the ones that maintain the employee’s payroll.

Whilst working for their host employer organisation, the employee will work as normal with other regular employees, operating as a full company member. 

The direct employer-employee relationship will, however, remain under the labour hire firm’s domain.

What is the best option for your business?

The option you choose for your business greatly depends on your needs. If you need a one-off hire for a permanent employee, a recruitment company would be a good fit.

If your company has varying and short-term labour needs, however, a labour hire firm would be the better option for you as it would greatly reduce recruitment costs and time. Businesses that use labour hire firms can tap into vast pools of highly trained workers at any time to cater for emerging labour needs without the time-consuming constraints of recruitment and training – or the expense of hiring permanent workers.

Read our post on Top 5 Reasons for Labour Hire in Toowoomba for the main benefits for business when choosing this option. 

What to look for in a permanent recruitment company or labour hire firm. 

Whichever solution you choose, be sure to look for these top traits of reputable recruitment companies and labour hire firms;

Reliability. 

A good agency should be able to deliver on time as delays could be very costly in terms of productivity. Ask for recommendations before settling on a recruiter. 

Industry Specific Expertise.

Ensure the recruitment firm or labour hire company you choose has the expertise and capability within your specific industry, otherwise attracting the best candidates may be more difficult. 

Large Candidate Database or Reach. 

The ability to market your vacant position to as many candidates as possible is vital for finding the best quality candidates. Having industry contacts that can also spread the word is an incredibly important quality for your recruitment or labour hire company to possess. 

Quality Screening and Interviewing Process.

A good recruitment firm should have processes in place to ensure that all candidates brought forward will match your needs.

Registered and Compliant.

The Labour Hire firm you choose to work with will be required to be registered with relevant government authorities and must be compliant with all labour laws and ethics. Be sure to ask about this to help protect you and your business. 

Excellent communication and relationship.

For a firm to recruit efficiently for your business, they need to build a relationship with you, whilst communicating effectively to understand your company culture and the kind of candidates that would fit well into the organisation.

So whether you are an employer or jobseeker, now that you know the difference between recruitment and labour hire you can be sure you choose the right solution that will work best for your business.

Find more information on DGT's Labour Hire and Recruitment Divisions here.

Register your vacancy here for Labour Hire or Recruitment through DGT here. 

 

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