PAYG withholding and labour-hire firms

What is a labour-hire or on-hire arrangement?

You operate a labour-hire firm, if under a labour-hire arrangement:

• you arrange for workers to perform work or services directly for clients
• the client pays you for this service
• you pay the worker for work performed for, or services provided to, the client
• the worker is not an employee of the client
• you may or may not employ the worker.

The arrangement is shown below.

Labour hire can be called different names, including: on-hire employment agent/agency contract management recruitment services group training organisations (where your business is referred to as the host employer). Regardless of how the activity is described, if you supply workers to another business, you must withhold from payments you make to individual workers.