Breaking down the costs of Labour Hire

Breaking down the costs of Labour Hire

As a Labour Hire Company, we are often asked about how the costs of Labour Hire are calculated. Let’s face it – recruitment can be a costly business. So how do you know if it’s a better financial decision for your business to recruit in-house or have a Labour Hire company manage your temporary staff?

First off, let’s look at Labour Hire:

What does the Labour Hire process involve?

Labour Hire companies take on the role of the employer. This process involves sourcing the workers, interviewing them and conducting reference and other background checks. Quite often the Labour Hire company will also be involved with the induction process as well. Essentially, Labour Hire companies take on the role of the employer and manage the workforce, as well as managing payroll. Clients then pay the Labour Hire company a fixed fee that comprises of the hourly rate, taxes, insurance, statutory charges and other miscellaneous fees. The benefits to this are that businesses can focus on their core business and have a skilled workforce on hand to deliver. However, with a big discrepancy between what workers are actually paid in comparison to the fees you are paying to a Labour Hire company, it ‘s often confusing to work out if it’s better to recruit in-house or outsource to a Labour Hire Company.

Breaking down the costs of Labour Hire, here are what the costs look like in detail:

Conversely, if you want to manage the recruitment process yourself, you will need to go through the same processes:

In-house recruitment process

The initial part of the in-house recruitment process involves ensuring that the job description is complete and is an accurate reflection of the role that you want to recruit for.  This will be a mix of the functional skills, credentials and personal attributes that are required.

The next step is writing an advertisement, screening applicants, shortlisting, interviewing and conducting reference and background checks.

Other processes that need to be handled include: contract negotiation, induction, ensuring compliance with State laws and governing bodies such as WorkSafe and payroll.

If this all seems a bit time consuming or too hard to manage, another strategy may be to manage some parts of the recruitment process internally and to outsource those areas that are time consuming or require specialist skills, such as screening and interviewing candidates or conducting background checks. The Flexi Recruitment Process Outsourcing model enables businesses to select which part of the recruitment model they would like to conduct themselves and which parts they would like to outsource, making it a great option to reduce the costs of Labour Hire, temporary or permanent recruitment.

Determining whether to recruit through a Labour Hire company vs in-house is dependent on the available resources that a business has and whether they are best spent on recruitment or on other activities.

For more information on Flexi’s Labour Hire and RPO services offerings, speak to the team at Flexi Personnel.