Owner Considerations for the Recruitment Agency Contracting Process

Owner responsibilities

Owner Considerations for the Recruitment Agency Contracting Process

Establishing a contracting business in recruitment weighs heavily on the business owner. Without detracting from the responsibilities, the most successful companies look for the fastest and least stress way to get through the compliance minefield so they can get on with business.


1. Fair Work: The Fair Work Office is the single source of data on employee Awards for your internal staff and on-hired contractors. Their website has numerous checklists and guides that set out your responsibilities as an employer.  The Fair Work Ombudsman is responsible for hearing disputes with your employees.

Smartest way through:

  • Work with a responsive, competent HR Advisor. We recommend Employee Matters. They are proactive, cost very little and will save you.
  • Invest time educating all relevant staff on the Awards that are most used for on-hired contractors – including the contract desk consultants.

2. ATO including STP: The ATO collects company taxation, employee withheld taxation (PAYG), determines the reporting cycles for your business, and is moving rapidly to online processing as evidenced by Single Touch Payroll (STP).

Smartest way through:

  • Ensure your external accounting practice or your accounting advisor is progressive and technology literate. Keep up to date.
  • Don’t allow actions that raise flags within the ATO – be compliant and on time.

3. Payroll Tax: Requirements for Payroll Tax vary by state and is payable by everyone on reaching a modest group payroll threshold.

Smartest way through:

  • Ensure on-costs reflect the relevant Payroll Tax for the state in which the contractor is working.

4. Workers Compensation: Rules and obligations vary for each state for Work Health and Safety (WHS), and the payment of Workers Compensation.

Smartest way through:

  • Get assistance to develop or review or certify your WHS procedures. Certex International is a specialist recruitment industry advisor that works nationally
  • Join an industry association. Both APSCo and RCSA have resources to assist members in this area. 
  • Agree in writing with your clients the details of awards and the tasks to be undertaken by on-hired contractors so that sufficient allowance can be made in on-costs for Workers Compensation taxation.

Now, you can get down to business

Wrestling the above compliance requirements into submission gives a business the opportunity to be in control. To concentrate on steering the ship. 

From a contractor placement perspective, steering the ship includes ensuring that:

  • Front office consultants have the strategy, tools and techniques required to identify clients, attract candidates, and successfully place contractors that will deliver legal and profitable business.
  • The support functions of pay and billing, credit control and accounting have the systems in place to operate in a compliant and profitable manner.

How to outsource

Outsourcing is a strategic card on the table. It should always be considered as a valid option when discussing strategy, growth, reduction, or a change in systems and processes.

Poor systems and processes increase risk, especially when outsourcing.  A smoothly operating and properly documented function has a higher chance of ongoing success in an outsourced environment.

When considering outsourcing, clarity is required to determine the scope of the function being outsourced. The business must keep control of what is important, which may include client relationships, contractor relationships, and bank accounts! An interesting article is here.

Choosing an outsourcing partner can be difficult as there are rarely two service offerings that can be directly compared. It is sometimes the harder-to-define areas that make the difference. Seamless technology, customer service (attentive, proactive and reliable), and contract flexibility (to vary scope and price as circumstances change).

When undertaking an internal change or implementing an outsourced solution, one rule remains in place. Be flexible and change the people not the systems.  It is usually unnecessary, dangerous, and expensive to modify good systems to meet your people’s needs – do the opposite.

Finally, an owner needs to be on top of the business. To fully understand the current state and the important trends. That can only be achieved with great reporting. What you need to know is very simple, it is margin. But how that is made up is complicated. You need to look at this from every angle.

Importantly, what you can’t delegate

A business can hire advisors and can outsource business functions. But the owners of a private recruitment agency are still responsible for all the actions taken by the company or on behalf of the company. The responsibility cannot be delegated.

This also applies to strategy. Get assistance to develop your strategy. Form an advisory board. Include your leadership team. But as owner you are ultimately responsible.

And you continue to have absolute responsibility for risk assessment. 2020 has been as a great life lesson in recurring revenue, variable costs, supply chain disruption and black swan events. Heed the lessons.

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