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A labour supply chain – the contracting of labour

This Report uses the term ‘labour supply chain’ to describe the situation where one business contracts another business to provide workers or services. When a business procured to provide labour services further subcontracts that responsibility to another business, this creates a labour supply chain or contracting network. The FWO has guidance material published on www.fairwork.gov.au that helps explain contracting labour and supply chains1.

The FWO has conducted several Inquiries into labour supply chain arrangements that include the contracting of trolley collection, cleaning and poultry processing services2. The findings of these Inquiries have disclosed ineffective governance at the top of the supply chain contributes to a culture of non-compliance by contractors. For the purposes of this Inquiry, the labour supply chains examined involved Councils, principal contractors and subcontractors.

The FWO’s experience conducting Inquiries of this nature is that multiple levels of subcontracting can create conditions which allow non-compliance to occur. The reasons for this include pressures of multiple businesses taking a profit as additional subcontractors are added to the contracting chain, and the perceived ability to hide non-compliance within convoluted business structures.

Further, the FWO has identified that those at the top of supply chains must have robust monitoring and governance in place so they have clear visibility of what is occurring throughout their supply chains. Failing to do so risks those at the top being blind to the potential unlawful conduct by those engaging the workers providing them with their services, and could potentially expose those businesses to action under section 550 of the FW Act as accessories to the unlawful conduct.

Inquiry into the procurement of security services by local governments labour supply chain

  1. See Contracting labour and supply chains page.
  2. See Inquiry reports page.