Publication Falling through the Cracks? Labour hire, Contracting and Outsourcing Risks across the ASX100: Company Reporting on the Indirect Workforce
Company Reporting on the Indirect Workforce
Given the risks and challenges associated with the use of indirect employment, investors should seek comprehensive disclosures on a company’s entire workforce, including direct employees and labour hire workers, in order to make reasonable judgements about the appropriateness and sustainability of a company’s employment model. Reporting should be sufficient to allow investors to ask questions about whether a company’s workforce strategy is based on low labour costs or maintaining and developing its human capital, and whether it will deliver long-term value for the company.[1]
ACCR conducted a review of reporting by 37 ASX100 companies in sectors where ACCR had identified specific allegations or industry-wide risks related to the use of indirect employment in the sector. Sectors included: airlines and airports, casinos, construction, mining, oil and gas exploration, property management, retail, utilities, supermarkets, and warehousing. See Appendix 1 for the full list of companies.
Note
While the analysis below refers to ‘indirect workers’, our review of data and company engagement used the GRI definition of non-employees, that is: “workers who are not employees and whose work is controlled by the organization”.
Finding 1: Less than half of companies publicly report on the total number and/or FTE equivalent of their indirect workforce
Less than half of companies publicly report on the total number and/or FTE equivalent of their indirect workforce (Figure 1).
It is important that companies provide disaggregated data on their indirect workforce so that investors are provided with sufficient information to assess the risks and benefits of their overall workforce strategy.
Of the 15/37 (41%) of companies who provided disaggregated data for their indirect workforce, only nine provided disaggregated data for all of their primary regions of operations. Here region could refer to countries, cities, world regions and/or specific worksites.
Finding 2: Very few companies provide any definitions of “workers who are not employees and whose work is controlled by the organisation”
Only 13/37 (35%) companies provided any definitions of “workers who are not employees and whose work is controlled by the organisation” (Figure 2). 10/37 (27%) companies provided either aggregated or disaggregated numbers for their indirect workforce, but failed to provide definitions for the categories of worker included in these numbers.
As such, it is not clear if their workforce data captures all of their indirect workforce, and if not, which part of the workforce was captured in the data. In other words, it is impossible to determine whether company disclosures reflect the entirety of a company’s workforce.
This still represented a substantial increase on the number of companies who provided definitions in 2020. In 2020, only 2/17 (12%) defined their use of the terms labour hire and/or contractor in their company documents. In 2021, 7/17 (41%) of the companies profiled in 2020 provided definitions for the salient categories of their indirect workforce.
A review of definitions provided by companies finds that the employment relationships that they describe are not consistent between companies. ACCR is not arguing for a consistent definition of categories of indirect workers. However, the variation between definitions suggest that where companies do not define the terms they are reporting on, investors are unable to gauge which section of the workforce the company is reporting on, and whether or not the data reflects the true numbers of workers employed under triangular employment relationships.
Finding 3: While all companies report some health and safety data, less than half provide disaggregated data for their indirect workforce
In 2021, all companies reported at least some numerical information on health and safety outcomes for their employees. ACCR interpreted this very broadly — ‘some numerical information’ could include any combination of health and safety data for the workforce for the reporting period. Companies commonly report against at least one of the following indicators (note that this list is not exhaustive):
- Training: number of employees covered by the company safety system, safety training hours
- Events/incidents: Total actual significant events, total potential significant events, fatalities, OHS management interactions, medical treatment injury
- Total figures and/or frequency rates: lost time injury, total recordable injury, occupational illness incidence, high consequence work related injuries, restricted work injury, serious potential incidents, absentees
- Warnings, penalties: OHS warning or penalty notices received
- Compensation claims: workers compensation claims (outstanding or new in the FY).
In 2020, we analysed whether companies provided any disaggregated reporting on OHS incidents (including fatalities). Of the companies which were analysed in both 2020 and 2021, only 4/16 (25%) provided disaggregated safety data. This increased substantially to 10/16 (63%) of companies in 2021 (Figure 3).
In 2021, we analysed disclosures on fatalities and other forms of data separately (see below). In both years, we specifically considered whether OHS data for employees and non-employees was disaggregated.
OHS data disaggregation by contract type is important for understanding how health and safety outcomes may differ among different sections of a company’s workforce. As indirect workers are often overrepresented in safety incidents, and may be at a higher risk of workplace health and safety incidents, it is crucial for companies to communicate any differences in its management, monitoring, and reporting of OHS data for each section of its workforce.
Fatalities
32/37 (86%) companies provided numeric data on fatalities in their Australian and/or global operations (Figure 4). Of these, only 15/37 (41%) companies provided disaggregated data on the number of fatalities amongst the indirect workforce. Significantly, for a further 5/37 (14%) it was unclear whether the reporting on fatalities included the indirect workforce.
Non-fatality data
While 25/37 (68%) companies provided some OHS data for the indirect workforce, only 14/37 (38%) provided disaggregated data for their indirect workforce (Figure 5).
Finding 4: Companies often use different OHS indicators to report on their direct and indirect workforces
14/37 (38%) companies report disaggregated OHS data for their direct workforce (employees, including fixed term) and indirect (contractor, labour hire) workforce. Of these, eight companies reported using (at least some) different metrics for their direct and indirect workforces, with most reporting against more indicators for their direct workers than their indirect workers. Six companies reported using the same metrics for both direct and indirect workforce.
It is not the case that reporting on more metrics is necessarily positive or reflects that a company pays greater attention to safety issues. However, comparing the metrics reported on for a company’s direct and indirect workforce can illuminate key differences between how the company monitors the health and safety of different sections of its workforce.
If a segment of the company’s workforce is excluded from its public reporting, this should be noted and an explanation given as to why. Given that in many cases, companies are already recording the number of hours worked by contractors as part of their OHS disclosures, the publication of disaggregated data would therefore not unduly burden them.
NAPF, Where is the workforce in corporate reporting?, NAPF, London, 2015, p. 14, viewed 1 August 2021, https://bit.ly/2ReWcfM. ↩︎
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