Introduction
Labour hire has become a standard part of the modern Australian workforce — especially in construction, manufacturing, transport, warehousing, trades and professional services. But while labour hire can provide flexibility, it also brings significant and often misunderstood insurance risks.
Insurers, including Berkley Insurance Australia, are reporting a sharp rise in severe claims involving labour-hire workers. Many businesses are unintentionally exposed — even when they believe they have the right cover.
This article explains the key risks, the traps around internal labour hire, and what employers must do to protect themselves.
Why Labour Hire Is Driving a Surge in Liability Claims
Berkley’s industry data shows that labour-hire related claims are now more frequent, more severe and reported much later than traditional public liability claims. Many claims are lodged up to two years after the incident, making investigation harder and increasing dispute potential.
Key drivers include:
- Growth of non-permanent workers.
- Workers’ Compensation recovery actions.
- Multiple parties creating overlapping duties.
These trends mean insurers are treating labour hire as a high-risk exposure.
Internal Labour Hire: The Overlooked Danger
Internal labour hire occurs when one entity in a business group employs a worker but another related entity directs, controls or benefits from their work.
Many businesses assume Workers’ Compensation will automatically cover the worker, but this is often incorrect.
Insurers treat internal and external labour hire the same. Workers’ Compensation may not respond if the injury relates to work for a different ABN. Non‑disclosure of internal labour hire is a common cause of uninsured losses.
Why Non-Disclosure Is Becoming a Major Problem
Insurers are tightening underwriting around labour hire. Non‑disclosure may result in:
- Exclusions or declined claims.
- Higher premiums.
- Significantly higher excesses — often $25,000 to $250,000+.
Accurate disclosure is essential at quotation, renewal and during the policy term.
What This Means for Employers
Businesses using labour-hire workers should:
- Disclose all labour-hire arrangements.
- Map organisational and ABN structures.
- Expect higher premiums and excesses.
- Understand that Workers’ Compensation alone may not be enough.
- Carefully assess high-risk work such as construction, machinery and transport.
Where the Industry Wants Change
Berkley suggests labour‑hire injury claims may be better managed within the Workers’ Compensation framework. This could improve outcomes for injured workers and stabilise liability premiums. Until then, businesses must proactively manage labour‑hire exposures.
How AllCover Helps Businesses Manage Labour-Hire Exposure
AllCover helps businesses by:
- Reviewing organisational charts and ABN structures.
- Identifying internal labour-hire arrangements.
- Ensuring exposures are properly disclosed.
- Negotiating suitable coverage with insurers.
- Advising on excess levels and premium impacts.
- Recommending risk controls to reduce liability exposure.
If your business uses labour hire — or you think your structure may count as labour hire — now is the right time for a review.