Recruitment ERP Consultant, Australia

Labor hire licensing and the records behind it

Several Australian states and territories run labor hire licensing schemes, and others are considering or reviewing them. Where a scheme applies, providers generally need a license, must meet ongoing obligations and report on their activities, and host businesses may be restricted to using licensed providers. The details, including who is covered and what must be reported, differ by jurisdiction, so your workplace relations advisor should confirm what applies to you.

From a systems point of view, licensing turns record keeping into a commercial necessity. If a client or regulator asks, you need to show who worked where, under what terms and with what checks completed. I write requirements for:

• license details per state, with renewal and reporting reminders
• host client agreements stored and linked to every placement under them
• worker inductions, licenses, tickets and visa checks recorded with dates, so an expired ticket blocks the next roster
• an audit trail of pay rates, changes and approvals per worker

Large host clients increasingly run their own compliance audits on labor hire suppliers. A system that produces the evidence on request saves days of document hunting. The global view of how recruitment back offices fit together is on my recruitment ERP page.

Award interpretation, pay rates and charge rates

Most on-hire workers in Australia are covered by a modern award or enterprise agreement, which brings penalty rates, overtime, allowances and casual loading. Interpreting those rules correctly is specialist work. I do not recommend building award interpretation inside a general ERP; dedicated award engines and payroll systems exist for it, and your workplace relations advisor should confirm classifications.

What the ERP needs is the output. Approved timesheets go through the award engine, which returns pay lines by type. From there:

• each pay line maps to a charge line using the rate card agreed with the client
• allowances that are recoverable are billed automatically, not left for someone to notice
• back pay from an award change or a classification correction flows through to both pay and, where the contract allows, the client charge
• margin per shift is calculated from fully loaded cost against charge

When quoting new work, the same logic should price the order: a weekend night shift has a very different cost from a weekday shift, and the charge rate should follow. The data flow between award engine, payroll and invoicing is something I design during integration planning.

Super, payroll tax and workers' comp as on-costs

A labor hire margin is only meaningful after on-costs. Superannuation guarantee contributions apply to most workers. State payroll tax can apply to wages and, in some arrangements, to payments to on-hired workers or contractors, with thresholds and rules that vary by state. Workers' compensation premiums depend on the state scheme and the industry classification of the work. Leave entitlements, where workers are permanent rather than casual, add provisions too.

I specify an on-cost table that:

• is maintained by finance per state and per job type, with effective dates so historical margin stays correct
• is applied to each approved hour based on the worksite state
• separates statutory on-costs from discretionary ones such as PPE or vehicles, so pricing reviews look at the right lines
• reconciles to the actual payroll tax and insurance invoices each period

Rates and thresholds come from your accountant and insurer; the system simply applies them. Payroll reporting through Single Touch Payroll stays in the payroll software. The HR-side records for employees are covered on my Zoho People Australia page, and broader GST and BAS context on my Australia ERP consultant page.

ABN contractors, RCTIs and GST

Professional contractors in IT, engineering and project roles often work through their own ABN, as sole traders or through a company. Whether that arrangement is genuine contracting or employment is a question for your advisors, and the consequences for super, payroll tax and liability are significant. Once decided, the back office needs to pay these contractors efficiently and correctly.

Many Australian agencies use recipient-created tax invoices: the agency issues the tax invoice on behalf of the contractor from the approved timesheet, under a written agreement. For this to work, the system should hold:

• the RCTI agreement per contractor with its dates
• a check of ABN and GST registration status before each payment run
• RCTIs numbered and issued automatically after approval, with a copy sent to the contractor
• contractor payments reported correctly for any taxable payments or super obligations your accountant identifies

On the revenue side, placement fees and on-hire charges carry GST, and invoices must show it correctly for client claims. Tax codes need to flow cleanly into the BAS. Treatment is settled with your accountant first, then written down as testable rules during the requirements gathering stage.

Funding weekly pay and choosing the system

On-hire workers are typically paid weekly, while host clients, especially large ones, pay on longer terms. That timing gap grows with every new contract. Many labor hire businesses use debtor finance or a funding facility; any of them will review aging, disputes and how quickly approved time is invoiced. Invoicing weekly from approved timesheets, with consolidated invoices where clients want them, is the single biggest lever the back office controls.

For the system choice, Australian firms usually compare a dedicated labor hire back office, a broad ERP adapted to on-hire work, or Xero or MYOB with a stronger timesheet and award tool around them. I test each option against your real cases: a worker on two awards in one week, a back pay adjustment, a host client audit request and a permanent placement refunded under guarantee.

Migration covers active workers and their classifications, rate cards, unpaid contractor RCTIs, open receivables and placements still in a guarantee period. Engagements are remote, and live sessions are booked to suit whichever state your finance team sits in. The Australia overview explains how projects run.