What Is A Labour Hire Agreement?

Written by

Raja Abbas

What Is A Labour Hire Agreement?

A labour-hire agreement is a contract between a labour-hire agency (an employment agency) and a company that outlines the terms and conditions of the employment in which the company is going to hire. The purpose of labour-hire agreements is to temporarily hire more labour without having to commit to long-term employees. There are various key components of labour hire agreements such as the scope of services and confidentiality. There are various benefits that come with using labour hire agreements such as hiring employees who are specialised in specific skills the business requires. 

Key Components of Labour Hire Agreements

Scopes of Services

Labour hire agreements will always identify the scope of services which the labour hired should fulfil. The purpose of setting the scope of services is to explicitly state 

Rates and Payments

The rates and payments for the labour services should also be stated in a labour-hire agreement. Stating the price offered

Insurance, Liability & Indemnification

In response to a company allowing your business to hire their employees, insurance should be discussed between the two parties and integrated within the labour-hire agreement. Labour hire agreements should also state any indemnities and risks that should be shifted between parties. 

Confidentiality & Indemnities Clauses

Labour hire agreements should also identify confidential clauses or any information that should remain private. Furthermore, indemnification clauses should also be included within labour hire agreements to ensure both parties are aware of potential risks and compensation. 


As a labour-hire agreement deals with temporary employment within a business, it is important to discuss the termination of employment– that is, when it ends, if the termination will cease immediately or if it will be phased out.

As labour hire agreements are subject to various laws and regulations such as the Fair Work Act 2009 (Cth) and the National Employment Standards (NES). Lawpath recommends using a labour-hire agreement template or seeking legal advice when drafting a labour-hire agreement to ensure legal compliance and consistency.

Access a free template for a Labour Hire Agreement when you sign up to Lawpath today.

Advantages of Using Labour Hire Agreements

Using labour-hire agreements comes with a multitude of advantages. These include:


Labour hire agreements provide flexibility to businesses. These agreements are able to fulfil the necessities that businesses need assistance with and are malleable to the workforce size needed.


Employers are able to access a market of employees who specialise in the tasks that are needed for the business. In response, businesses can focus on getting their short-term projects done without the long-term commitment of hiring a full-time employee.

Cost Efficiency

Employers may experience cost savings as insurance, benefits or other overhead costs are not their responsibility. Employers are also likely to spend less on training, especially when hiring labour that is specialised.  

Common Mistakes to Avoid

Not Using A Customiseable Template

Using no template or a genetic template can lead to a labour-hire agreement that lacks specificity. Using a customisable labour hire agreement template is important in ensuring that the contract is legally compliant, specific and communicative.

Seeking legal advice is integral when drafting a labour-hire agreement. Consulting with a lawyer when engaging with labour-hire agreements ensures legal compliance and consistency within the contract. 

Unclear Job Descriptions and Responsibilities

Vague or poorly defined job descriptions and responsibilities can lead to misunderstandings and disputes for the duration of the contract. It is important that your labour hire agreement is clear when describing the role and duties the labour must fulfil under the contract. 

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To conclude, labour hire agreements are legal contracts between a labour-hire agency and a business which facilitates the temporary employment of specialised labour for businesses. This agreement consists of critical key components such as rates and payments, scopes of services and indemnities. Furthermore, there are various key advantages of using labour hire agreements such as the capacity to be flexible and cost efficient. Common mistakes to avoid when drafting a labour-hire agreement include not seeking legal advice or using a customizable template.

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