Labour hire companies assume the role of the employer. They find the workers, interview them, and send them directly to you. In exchange, you, the host employer, will pay the agency a fixed fee made up of taxes, insurance, statutory charges, and other miscellaneous fees. The overall goal is to get you the skilled workforce you need without having to find the workers yourself.
The problem most companies have with recruitment agencies is that their fees hike up the cost per employee, making the agencies appear far more expensive than they are. Most agencies will charge you approximately $35 per hour per employee, while you may only be willing to pay around $25 per hour per employee. With a $10 difference, why would anyone hire a labour company? Surely there must be a reason.
So, why do labour hire companies charge so much? Let us break down theactual hiring cost and compare them.
To show the difference between doing the hiring yourself and using an agency, Let’s look some of the cost of both scenarios.
The numbers we use are considered average, but they may vary depending on your business and where you are located.
| Wage | Rate | Cost |
|---|---|---|
| Superannuation | 9.5% | $2.38 |
| Payroll Tax | 5% | $1.23 |
| Sick Leave | 4.3% | $0.98 |
| Annual Leave | 8.6% | $1.93 |
| Public Holidays | 4.3% | $1.05 |
| Parental Leave | 1% | $0.29 |
| Long Service Leave | 1.9% | $0.50 |
| Public Liability Insurance | 2% | $0.50 |
| Workcover | 3% | $0.82 |
| Payroll Costs | $350/yr | $0.20 |
| Protective Equipment | $250/yr | $0.1 |
| Total | $35.01 |
That total is the amount of money your company would pay each worker if you directly employed him or her instead of going through the labour hiring agency. That’s only $2.74 difference from what your labour agency wants to charge you, and their cost ($35) is all inclusive. Do not be fooled when looking at the sticker price alone ($25 v. $35). It can be misleading.
Using these percentages set up the math and see what benefits that $2.76 might be getting you. As a manager, you might not have to wear so many hats in your position. If you feel as if you are handling too many jobs, letting someone else handle the labour might free up some time to devote to other matters. The stress relief the agency might give you could make up for the $2.76, and you might find yourself be more productive as a result.
With the increasing unbalance in labour market, Companies are having difficulties to hire staffs directly. Meaning, the trend of posting job ads and getting staff are outdated or too much time consuming. Companies which are new and start up are facing huge problems when they rely on self-hiring processes. Businesses are shutting down due to lack of staffs and looking for external source of hiring.
Labour hiring agencies or Staffing agencies/recruitment agencies can help you in your businesses in following ways: -
Save money for your business on advertising, payroll taxes, workers compensation or insurances.
Labour Hire agencies will screen potential candidates for your requirements saving time sifting through all the applications for your perfect fit.
You have the bonus of your Labour Hire Company having both internal and external teams working across the local regions covering all aspects of employment opportunities, as well as longstanding relationships with local businesses.
Labour Hire agencies offer site safety assessments, employer and employee relationship management, and continued contact to ensure that everything is conducted professionally and safely for all concerned.