Fly-In Fly-Out Contractors and Remote Supply Chains: Verification Risks in Mining and Resources

In mining and resources, a fraudulent or unlicensed contractor arriving at a remote site cannot be physically inspected beforehand. By the time the problem surfaces, the cost of removal is significant.

Licence requirements by state

Contractor licensing is state-based. Queensland requires QBCC licensing for building and construction work. New South Wales requires NSW Fair Trading licensing. Western Australia has its own framework. Gumshoe currently checks QLD QBCC and NSW Fair Trading licence registers, covering the two largest states by construction and resources activity. A contractor claiming Queensland building credentials can be verified against the QBCC register in the same check as their ABN and insolvency status.

Labour-hire and SG compliance in remote settings

Remote site labour-hire is a known risk area for superannuation guarantee non-compliance. Labour-hire companies in fly-in fly-out arrangements that are not meeting their SG obligations create a liability chain that can extend to the principal contractor and, in some circumstances, to the site operator. The ATO's SG non-compliance register is checked as part of standard Gumshoe verification.

Phoenix risk in fly-in fly-out workforces

The FIFO contractor market has seen repeated phoenix activity: companies collapsing mid-contract and re-emerging under a new name with the same principals, leaving workers unpaid and principal contractors holding the contract risk. The pattern is recognisable: new ABN registered recently, director associated with a recently deregistered entity, website registered in the last few weeks.

A contractor verification before site access approval that includes ABN age, director checks against ASIC banned persons, and domain age gives an early signal before mobilisation fees are paid.

The pre-site-access verification workflow

For each new subcontractor before site access approval: verify ABN status and age, check ASIC insolvency register, check QBCC or NSW Fair Trading licence as applicable, verify SG compliance, confirm web presence is established, and complete a phone verify to the registered contact. Save the case as part of the contractor pre-qualification file. For ongoing subcontractors, add to Phoenix Shield for continuous monitoring during the engagement.

Uncommon Insights

Under section 588G of the Corporations Act 2001, a company may be held liable for insolvent trading if it fails to prevent its officers from incurring debts while the company is insolvent. In the context of remote site procurement, this means that principal contractors and site operators may be exposed to liability if they fail to verify the solvency of their subcontractors, including labour-hire companies and fly-in fly-out contractors. By incorporating ASIC insolvency register checks into their verification workflow, companies can reduce their risk of insolvent trading liability.

The Australian Taxation Office's (ATO) Superannuation Guarantee (SG) non-compliance register is a valuable resource for verifying the SG compliance of labour-hire companies and other subcontractors. However, it is not a guarantee of compliance, and companies should also conduct regular audits to ensure that their subcontractors are meeting their SG obligations. Under section 16 of the Superannuation Guarantee (Administration) Act 1992, companies may be liable for SG shortfall amounts if their subcontractors fail to meet their SG obligations.

While ASIC's banned persons register is an important tool for verifying the integrity of subcontractor directors, it is not the only register that should be checked. Under section 601HG of the Corporations Act 2001, ASIC may also disqualify individuals from managing corporations, and this information is not always publicly available. By conducting a comprehensive search of ASIC's registers, including the disqualification register, companies can gain a more complete picture of their subcontractors' directors and reduce their risk of engaging with untrustworthy contractors.

Section 420A of the Corporations Act 2001 requires companies to keep records of their dealings with related parties, including subcontractors. In the context of remote site procurement, this means that companies should maintain accurate and detailed records of their verification processes, including ABN checks, licence checks, and phone verifies. By doing so, companies can demonstrate their compliance with the Act and reduce their risk of liability in the event of a dispute or audit.