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Labour-Hire vs. Recruitment Agencies: What’s the Difference and Which is Right for Your Business?

Businesses use labour-hire services and recruitment agencies when they need new employees but want to save themselves a lot of time and paperwork.

Understanding Labour-Hire and Recruitment Agencies

Usually, labour-hire services provide workers to the construction and building industry, and in most instances only for a short period.

They find workers with specific skills, employ these workers and hire them out for a fee to client companies. The labour-hire service stays the employer and is in control of the workers’

  1. wages,
  2. entitlements,
  3. training,
  4. Insurance, and
  5. legal and registration aspects.

To understand recruitment agencies one must know how they operate.

  • When a new employee is needed a business sends a job description to the recruitment agency which searches for suitable candidates.
  • The agency arranges interviews between candidates and the client business.
  • If the business is satisfied, the candidate is employed and the recruitment agency receives a finder’s fee from the client company.

Key Differences between Labour-Hire and Recruitment Agencies

Both labour-hire services and recruitment agencies try to provide the best labourers or employees to client companies. The main difference is that a labour-hire firm stays the employer of the workers and has control over their wages and entitlements. The client company pays the labour-hire service and not the individual workers.

A recruitment agency, on the other hand, completely ‘hands over’ the successful candidates to the client companies who become the employers.

Advantages and Disadvantages of Labour-Hire and Recruitment Agencies

Advantages of labour-hire include the option of a replacement if the person doesn’t fit the specific job. When a project requires a specific skill set for a limited time, labour-hire is the solution. Labour-hire services also allow businesses to hire supplementary labour in peak times. Many companies will tell you that if you use a reliable labour-hire company like the UVS Group in Sydney, labour-hire has no disadvantages!

The advantages of recruitment agencies include the following:

  • They have the expertise to filter and sort applications. By using a recruitment agency the client company doesn’t have to sort through hundreds of resumes.
  • Recruitment agencies have the resources to find candidates with the required skills, qualifications and experience.

The one disadvantage of using a recruitment agency is that a finder’s fee is payable for every successful placement. The finder’s fee differs but, generally speaking, the client company has to pay at least 15% of the new employee’s annual salary.

What to Consider when Choosing between Labour-Hire and Recruitment Agencies

It depends on the type of employment/needs of the client company to decide whether to use a labour-hire service or a recruiting agency.

Generally speaking, a labour-hire service will be used if a specific task, especially in the construction or building industry, has to be done as a one-off operation, while a recruitment agency will be used if a permanent new employee is required.

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