Hiring is rarely a simple “fill a role” task. Most organisations are balancing fluctuating demand, skills shortages, safety and compliance requirements, and pressure to control costs.
Two of the most common options are:
- Labour hire (contingent workforce supplied by a provider), and
- Permanent recruitment (direct employment for an ongoing role).
This guide breaks down the differences in plain English, plus a practical decision framework you can use today.
Key takeaways
- Choose labour hire when you need speed, flexibility, and fast mobilisation.
- Choose permanent recruitment when you’re building long-term capability and retention.
- Compare total cost of ownership, not just hourly rates.
- Clarify safety, onboarding, and compliance responsibilities upfront.
Quick comparison (at a glance)
Labour hire is usually best when you need:
- Fast mobilisation (days, not weeks)
- Flexible headcount (ramp up/down)
- Coverage for leave, shutdowns, projects, peak periods
- Access to a pre-qualified talent pool
Permanent recruitment is usually best when you need:
- Long-term capability in a critical role
- Knowledge retention and continuity
- Strong internal culture fit and career progression
- A stable team for BAU operations
What is labour hire (in Australia)?
Labour hire is when a business engages a labour hire provider, and the provider supplies workers to perform work at the host site.
In many arrangements:
- The worker is employed by the provider, and
- The host business directs day-to-day work at the site.
Labour hire can be effective for operational continuity, but it also requires clear processes for safety, onboarding, supervision, and compliance.
Explore staffing services: Staffing Services overview
What is permanent recruitment?
Permanent recruitment is when you hire a candidate into an ongoing role as your direct employee (full-time or part-time). You can recruit directly, or use a recruitment partner to source, screen, shortlist, and support selection.
For organisations building long-term capability, permanent recruitment can be a strong option.
Permanent recruitment services: Permanent Recruitment
When labour hire is the better choice
Labour hire tends to perform well when work demand is variable or time-critical, for example:
1) Peaks, projects, and shutdowns
- You can ramp labour up quickly without building long-term fixed headcount.
- You can plan mobilisation and demobilisation around defined time windows.
2) Hard-to-fill operational roles
- Providers often maintain active candidate pools and can screen for tickets, experience, and site readiness.
3) Geographic spread and multi-site operations
- A provider can support mobilisation across regions, including workforce coordination and redeployments.
4) Speed-to-productivity matters
- With the right onboarding and supervision, labour hire can shorten time-to-fill and keep operations moving.
Need a managed approach to contingent labour? Managed Skilled Workforce
When permanent recruitment is the better choice
Permanent recruitment is often the right call when:
1) The role is core to your business
- Leadership roles, specialist roles, and critical operational roles often benefit from long-term continuity.
2) You’re optimising for retention and capability
- Permanent hires can be developed, cross-trained, and promoted internally.
3) You need strong cultural alignment
- For roles with high stakeholder interaction or leadership expectations, cultural fit is often a key driver of success.
4) The cost of turnover is high
- Repeated churn can be more expensive than investing in selection and onboarding upfront.
Cost considerations (what to compare)
To compare labour hire vs permanent recruitment, avoid looking at hourly rates alone. Instead compare total cost of ownership, including:
- Time-to-fill impact (lost production, overtime, backlog risk)
- Training and onboarding time
- Supervision load and safety management
- Turnover and backfill costs (for permanent roles)
- Compliance overhead and reporting requirements
A simple decision framework (ask these 8 questions)
- Is the role ongoing for 12+ months, or time-bound?
- How quickly do you need someone productive on site?
- Is the work demand stable, seasonal, or project-driven?
- Is the role core to business continuity or specialist capability?
- What’s the safety and compliance risk profile of the work?
- Do you need to scale headcount up and down frequently?
- How important is long-term culture fit and internal development?
- What happens if the role stays vacant for 4–8 weeks?
Verdict (rule of thumb)
- If the answer to (2), (3), or (6) is “high urgency / variable demand”, labour hire is often the practical solution.
- If the answer to (1), (4), or (7) is “long-term / core capability”, permanent recruitment is often the better investment.
Compliance and risk checklist (AU context)
Use this checklist to reduce risk, regardless of hiring model:
Labour hire
- Licensing: confirm labour hire licensing requirements in relevant states (e.g., QLD, VIC, SA have labour hire licensing schemes).
- Define who is responsible for induction, supervision, training, and safety reporting.
- Confirm award/EA coverage and pay expectations.
- Document site access requirements, tickets, and medical/fitness standards.
- Set clear incident reporting and return-to-work processes.
Permanent recruitment
- Use a structured selection process (scorecards, consistent questions).
- Check right-to-work and role-relevant qualifications.
- Clarify probation expectations and performance measures.
- Plan onboarding (first week, first month, first 90 days).
Managing multiple suppliers or sites? MSP and People Solutions
Common mistakes to avoid
- Hourly-rate tunnel vision: choosing based on hourly rate instead of time-to-productivity and risk.
- Onboarding gaps: treating labour hire onboarding as “optional” (it isn’t, especially for safety-critical roles).
- Model mismatch: hiring permanent for roles that are actually seasonal/project-driven, then facing churn.
- Unstructured hiring: running unstructured interviews and hoping “gut feel” will reduce turnover.
Bottom line
Labour hire is typically best for speed, flexibility, and variable demand. Permanent recruitment is typically best for long-term capability, continuity, and retention.
Need help choosing the right model? Contact Programmed Staffing Services
General information only. This article provides general information and is not legal advice. Always consider your specific obligations and local requirements.
