Workers under agency contractors in Australia receive significantly poorer pay and employment conditions than those under direct-hire arrangements, according to a new study.

A research by Dr Underhill from the Deakin University Business School shows that host employers assume limited responsibility for the conditions of workers they employ through agency employers, including whether their conditions satisfy minimum labour rights or occupational health and safety (OHS) standards.

While the same rights and protection should apply to temporary agency workers and direct-hire employees, Dr Underhill argues that in practice "the triangular nature of agency employment creates barriers to its successful application", with agency workers being employed by one party, the agency, while their pay and conditions are substantially influenced by another, the host employer.

At a time when temporary agency work is expanding, Dr Underhill proposes that there is a need to reconsider the legal responsibilities for agency worker protection so that host employers have the same responsibilities for applying employment standards as they do for their own staff.

According to her, ss the ILO and EU found, compromises and tradeoffs are required in the conflicted area of minimum standards for agency workers because the standards are hotly contested in a context where "the agency business model rests upon the supply of labour at a cost lower than that which the host can achieve."

Dr Underhill said, under the Fair Work Act 2009 the responsibilities imposed on the common law employer - the agency - have only limited practical application to the host.

Agency employees face job loss for raising a grievance, are required to accept any job placement to maintain an income, are geographically dispersed with transitory job locations, and have little power to enforce their few employment entitlements.

The study is based on Australian data from relevant industrial tribunals, court cases, a survey of 147 agency workers and five focus groups of agency workers and representative union officials.

It also relies on a sample of workers' compensation claim files of injured agency and comparable direct-hire workers (198 of each) that have been investigated by insurance claim agents.