Labour hire or genuine service delivery: where is the line in the evolving regulated labour hire arrangement landscape?

Businesses using contractors to deliver services, rather than simply supply labour, now have greater clarity on when an arrangement will be considered ‘for the provision of a service’ to avoid a Regulated Labour Hire Arrangement Order (RLHA Order).

For the first time since the ‘same job, same pay’ laws took effect as part of the Closing Loopholes reforms, the Fair Work Commission has dismissed an application for a RLHA Order on the basis that the performance of work was for the provision of a service rather than the supply of labour. The decision highlights that while genuine service arrangements can avoid an order, the threshold to establish a genuine service arrangement remains high.

With a steady flow of RLHA Orders continuing to be granted by the Fair Work Commission and the High Court recently declining to grant special leave to consider the service contractor exemption, it will unfortunately continue to be difficult for employers and hosts to know with any certainty when arrangements will be treated as being genuinely for the supply of services (and outside the same job, same pay laws) rather than the supply of labour (and being susceptible to RLHA Orders).

What are RLHA Orders and when will they be granted? 

The ‘same job, same pay’ provisions in the Fair Work Act empower the Fair Work Commission to make a RLHA Order in relation to employees who are supplied, or will be supplied, by their employer to perform work for a host employer.  Once made, a RLHA Order requires employees of a third-party provider of labour to be paid no less than the rates of pay under an enterprise agreement that would apply to the employees if they had been employed directly by the host organisation (even if the host does not employ its own employees to do the same work).

An application for a RLHA Order can be made by a regulated employee, an employee of the regulated host, a union that is entitled to represent a regulated employee, an employee of the regulated host, or the regulated host, but not the employer who supplies the employees to the host.

The Commission must make a RLHA Order if it is satisfied that:

1. an employer is supplying (or will supply), directly or indirectly, employees to perform work for a regulated host;
2. a covered employment instrument (usually an enterprise agreement) applying to the host would apply to the employees if the host were to employ them directly for that kind of work;
3. the host is not a small business employer;
4. the work is not or will not be for the provision of a service, rather than the supply of labour (Service Contractor Exemption), having regard to various matters (as discussed below); and
5. it is fair and reasonable in all the circumstances to make the order, having regard to various matters including:
   1. the pay arrangements that apply to employees of the regulated host and the regulated employees;
   2. the history of industrial arrangements applying to the regulated host and the employer;
   3. the relationship between the regulated host and the employer, including whether they are related bodies corporate or engaged in a joint venture or common enterprise; and
   4. the terms and nature of the arrangement under which the work will be performed, including the period for which the arrangement will operate, the location of the work being performed, the relevant industry, and the number of employees who are to perform work for the regulated host under the arrangement.

When a RLHA Order is in force, the key obligation is that the employer supplying a regulated employee to the regulated host must pay the regulated employee at no less than the protected rate of pay for the employee in connection with the work performed by the employee for the regulated host, being the full rate of pay that would have been payable if the host’s employment instrument covered those employees.

While these reforms were aimed at stamping out the illegitimate use of labour-hire, they are not confined to labour-hire workers as traditionally understood. In particular, the Service Contractor Exemption has been narrowly interpreted by the Commission and the Federal Court, making it difficult for employers and hosts to rely on this exemption.

Landscape of RLHA Orders

Since the changes commenced, a stream of RLHA Orders have been made by the Commission. The Mining and Energy Union has lodged the largest number of applications, and the majority of applications proceed by consent or unopposed. Until March 2026, every application for a RLHA Order had been granted, at least in part.

On 17 March 2026, for the first time, the Commission refused to grant a RLHA Order in Application by the Australasian Meat Industry Employees’ Union re cleaning work at Bartter Enterprises’ poultry processing facility [2026] FWC 795 (Bartter Decision) on the basis that the employer and regulated host successfully argued that the work performed by the regulated employees was for the provision of a service, rather than the supply of labour.  

Service Contractor Exception

The Service Contractor Exemption exception in section 306E(1A) of the FW Act requires that the Commission be satisfied that the performance of the work is not (or will not be) for the provision of a service, rather than the supply of labour, having regard to the mandatory factors in section 306E(7A). 

The mandatory factors require an assessment of:

1. employer involvement in performance of the work;
2. the extent to which, in practice, the employer directs, supervises or controls the regulated employees when they perform the work (including managing rosters, assigning tasks or reviewing the quality of the work);
3. the extent to which the regulated employees use systems, plant or structures of the employer to perform the work;
4. the extent to which either the employer or another person is subject to industry or professional standards or responsibilities in relation to the regulated employees; and
5. the extent to which the work is of a specialist or expert nature.

The Commission has taken a relatively narrow interpretation of the Service Provider Exemption which has been upheld by the Full Federal Court.^[1]

The Commission, as upheld by the Full Federal Court, held that the proper approach to applying sections 306E(1A) and (7A) can be summarised as:^[2]

• The Commission is required to be positively satisfied that the performance of work by the regulated employee or employees is not for the provision of a service, rather than the supply of labour.
• The formation of that state of satisfaction requires the characterisation of the purpose, object or function of the performance of work by the regulated employees and involves an evaluative inquiry in which all relevant matters, at least including those in s 306E(7A), are taken into account.
• The inquiry as to whether the performance of work is for the “provision of a service” cannot be reduced to an examination of whether the employer provides anything more than “merely” or “just” the supply of labour. Questions of extent and degree are likely to be involved in the characterisation exercise.
• The focus is required to be on the performance of work by the regulated employees albeit that the commercial or contractual arrangements between the employer and the regulated host and the nature of the employer’s operations may be relevant when characterising the purpose or function of the work of the regulated employees.
• The Commission is required to have regard to the matters in s 306E(7A) in the sense those matters are to be treated as a matter of significance in the decision-making process, but the considerations listed in s 306E(7A) are not necessarily exhaustive of the matters to be considered. The Commission may have regard to other relevant matters.
• The question posed by s 306E(1A) is likely to turn on whether the purpose of the work performed by the regulated employees can properly be characterised as contributing to the provision of an identifiable and discrete service to the regulated host which is distinct from the supply of the labour of the workers to work in or as part of the business of the regulated host.

[Emphasis added]

The Bartter Decision

In March 2026, the Commission dismissed an application by the Australasian Meat Industry Employees’ Union for a RLHA Order covering workers performing industrial cleaning services at a poultry facility, finding that the work was for the provision of a service.^[3][4]

Bartter Enterprises Pty Ltd (Bartter) operates a poultry processing facility in New South Wales. After Bartter’s daily processing concludes each day, employees of TCS (AUS) Pty Ltd ATF TCS Trust trading as Cleaning Edge Solutions (TCS) enter the poultry processing facility and, using specialised equipment and chemicals supplied by TCS, undertake full sanitisation of food-contact surfaces, removal of organic residues, drain and deep floor cleaning to meet Bartter’s requirements and industry standards.

The Commission noted that the purpose of sections 306E(1A) and (7A) of the FW Act is to exclude instances where work is performed by employees of contractors that provide services beyond the mere supply of labour. While section 306E(1A) seeks to ascertain the purpose of the performance of work by the regulated employees, section 306E(7A) identifies the types of considerations which are relevant as to whether the purpose of the work is to provide a service or the supply of labour.

The Commission had regard to both the nature of the work in practice and the contractual arrangements between the parties.

The Commission noted the following key contractual arrangements:^[5]

• TCS is contractually required to:
  • provide ‘cleaning and sanitisation services’ as directed, and as specified in the contract;
  • deliver the cleaning services according to standards set by Bartter;
  • supply all necessary equipment and workers as is necessary to deliver the services;
  • supervise, instruct and train the workers who perform the services; and
  • comply with relevant workplace laws, including any applicable labour hire licensing laws.
• Bartter is only required to give access to the poultry facility and to supply utilities (such as water and electricity) to enable the services to be performed and has no contractual right to influence how the TCS employees deliver the services.
• Bartter pays TCS a weekly charge that varies based on the number of days per week cleaning work is performed at the facility. The contract does not prescribe how many employees TCS must engage, nor does it require employees to work a particular number of hours or complete the cleaning work within a specified timeframe. Hourly rates are only stipulated in the contract for ‘additional work’ approved by Bartter.

The Commission contrasted these contractual arrangements to contracts for the supply of labour where price is largely driven by the cost of the labour supplied.

Further, the Commission considered that, in practice, TCS employees are inducted, trained, supervised and accountable to TCS's own management structure, and use equipment and chemicals supplied by TCS at its cost. Bartter representatives are not present to supervise the cleaning work, with the TCS site manager and team leaders being present to supervise and Bartter is not involved in rostering TCS employees, with its only role being to advise when production is not occurring so cleaning can be performed.

In applying the mandatory considerations under section 306E(7A), the Commission considered that:

1. TCS is exclusively involved in matters relating to the performance of work by the TCS employees at the facility;
2. TCS directs, supervises and controls the work of TCS employees, including by managing rosters, assigning tasks, and reviewing the quality of the work with Bartter having no role in these matters;
3. TCS employees use TCS systems, plant and structures when performing the work from end to end with Bartter only providing access to the facility, water, electricity and lighting;
4. TCS is subject to, and subscribes to, industry and professional standards in relation to the work performed by the TCS employees; and
5. the work performed by the TCS employees is specialist in nature.

While the Commission was clear that the consideration of whether the work was for the provision of a service, rather than the supply of labour, was an evaluative assessment having regard to numerous matters including the mandatory matters in section 306E(7A), it is clear that the pricing structure and the involvement of Bartter in the performance of the work were important inputs into that assessment.

Bartter also argued that the relevant enterprise agreement would not apply to the TCS employees if employed directly by Bartter. The Commission rejected this argument and held that the TCS employees undertaking industrial cleaning fell within the broad definition of a Process Employee Level 3, being an employee who ‘undertakes general duties that include…Employees trained and qualified to use steam or other specialised equipment or commercial chemicals to sanitise food processing equipment’.

Key takeaways for employers and hosts seeking to rely on the Service Contractor Exemption

The closer an arrangement looks, feels and is priced like embedded labour within the host’s enterprise, the more likely an RLHA Order will be available. The more an arrangement operates as a genuine, specialist, independently delivered service using the provider’s own equipment, systems and standards, the more likely s 306E(1A) will bar an order.

In particular, employers and hosts should note:

• both contractual form and the practical reality of the relationship are important when considering the purpose of an arrangement;
• contracting arrangements should demonstrably deliver outcomes that are meaningfully beyond simply supplying labour into the host’s operations, both contractually and in practice;
• service models where the provider’s employees are embedded within the host’s ordinary workforce are higher risk;
• practical control should sit with the provider as far as possible including day‑to‑day direction, supervision, rostering, tasking and quality review;
• workers should use the provider’s systems, plant and structures where possible, particularly when the plant and structures are specialist to the services being provided; and
• models where pricing arrangements are driven largely by the cost of labour (for example, through the number of workers involved and hourly rates) are higher risk than pricing arrangements that expressly reflect service delivery (for example, fixed fees for scope or outcomes).

Upcoming developments

This area continues to evolve as more RLHA Orders are sought and granted and employers navigate post-RLHA Order obligations, including the requirement to apply for a variation if a new employer is to supply employees to perform work covered by the order, and to notify tenderers who may reasonably be expected to become covered by the order.^[6]

Employers and hosts will be closely monitoring the review being conducted by former Commission member Susan Booth into the Closing Loopholes reforms more broadly, including the RLHA Order provisions. Ms Booth is due to submit a draft report by 15 May 2026 and a final report by 15 June 2026.