Labour hire law – licensing, liabilities and the looming deadline!
On 20 June 2018, the Victorian Parliament passed legislation implementing labour hire licensing requirements, making Victoria the third state in Australia to do so.
Providers and host employers in the Victorian labour hire industry will now face heavy regulation and stiff penalties for unlawful conduct. Such regulation requires labour hire providers to obtain a licence on or before 29 October 2019. This Limelight discusses the requirements, risks and penalties brought about by this legislation.
The objectives and key features of the Victorian Labour Hire Licensing Act 2018 (the Act) are similar to those of equivalent laws in Queensland and South Australia. Each of these laws respond to concerns about exploitation of vulnerable workers by labour hire contractors, particularly across commercial cleaning and fresh food supply chain industries.
The Act creates significant barriers in order to ensure that all labour hire providers meet strict licensing standards. These standards measure a labour hire provider’s past and future capacity to comply with workplace, superannuation, tax, safety and migration laws, as well as applicable accommodation standards.
As of 30 October 2019:
- all labour hire providers must operate with a licence; and
- all hosts/users of labour hire services must only use licensed labour hire providers
Labour hire service provider
The meaning of ‘provides labour hire services’ is very broad in Queensland (with some carve-outs through regulations), while in Victoria and South Australia it is narrower and focused on arrangements that are conventionally understood as a third-party provision of labour to a host business.
In Victoria, businesses that provide the following services will require a labour hire licence:
- Traditional labour hire providers – where a business (provider) supplies one or more individuals to another person (host) to perform work in and as part of a business or undertaking of the host, and in which the provider pays the individual for performance of that work
- Recruitment – where the provider recruits or places one or more individuals with a host to perform work in and as part of the host’s business and in which the provider both procures or provides accommodation and pays wages to those individuals
- Contractor management – where the provider recruits or places one or more individuals as independent contractors to perform work in and as part of a host’s business or undertaking and the provider manages the contract performance by the independent contractors
- Deemed labour hire – where individuals are taken to perform work in or as part of a labour hire business or undertaking if they perform activities in commercial cleaning, horticultural, and meat/poultry processing industries
Labour hire licence
Current labour hire providers will need to apply for a licence before 29 October 2019 in order to operate legally in Victoria. Applications will open 29 April 2019.
If an Application is refused or cancelled, a labour hire provider may be required to wait between 3 months to 2 years before they can re-apply.
The Application for a labour hire licence will require Applicants to disclose:
- the number of workers supplied by hosts;
- the types of visas held by workers;
- whether an investigation by a regulator, or proceedings in a court or tribunal is on foot in relation to labour hire laws, workplace laws or minimum accommodations standards;
- whether an incident has occurred in the preceding 12 months to which the Applicant was required to notify the regulator in relation to occupational health and safety or workers compensation;
- declare that the Applicant (or its corporation, directors and officers) has been a fit and proper person within the preceding 5-10 years. An Applicant will not be considered fit and proper if they have been found by a regulator, or have given an enforceable undertaking, in respect of an alleged contravention of a workplace law, labour industry law or minimum accommodation standard;
- declare that the Applicant has complied with all of its legal obligations (i.e. taxation, superannuation, occupational health & safety, worker’s compensation, migration or any laws relating to the business to which the licence relates); and
- Other requirements
So as to protect their interests, providers should review their safety management systems to ensure compliance with the Occupational Health and Safety Act 2004 (Vic) (“OH&S Act”) and its regulations.
Conduct prohibited by the Act
The Act prohibits:
- providers from providing labour hire services without a labour hire licence
- hosts from entering into an arrangement with an unlicensed labour hire provider
- unlicensed providers from advertising or holding themselves out to be providers of labour hire
- a person from entering into arrangements for the supply of workers that they know, or have reasonable grounds to suspect, are designed to circumvent or avoid obligations under the Act
Penalties for breach
|Providing labour hire without licence||Natural persons:
up to $126,856
up to $507,424
up to $130,439
or 3 years’ imprisonment
up to $378,450
up to $140,000 or 3 years’ imprisonment
up to $400,000
|Entering into arrangements with an unlicensed labour hire service provider||As above||As above||As above|
|Advertising, holding out, or willing to provide labour hire services without a licence||Natural persons:
up to $31,714
up to $126,856
|Up to $25,230||Up to $30,000|
The Act establishes the Labour Hire Licensing Authority and grants its inspectors strong investigatory and enforcement powers similar to those provisions available to officers under the OH&S Act. In the other two states, the licensing schemes are being administered by the Queensland Office of Industrial Relations and SA Business and Consumer Services.
The Labour Hire Licensing Authority is authorised to monitor, enforce and investigate compliance with the Act. Such powers give its inspectors the right to enter or search premises with or without consent, seize, make enquiries and issue notices.
This Act will not only impact labour hire providers and users, but also the insurance industry.
Key considerations include whether:
- underwriters will need to adjust premiums to account for risks brought about by the Act;
- new exclusions will need to be carved out of policies; and
- Claims or investigations arising under the Act will activate Defence Costs, Investigation Costs, Management or Corporate Liability cover.
Gilchrist Connell’s workplace team can assist labour hire providers with preparing their Application for a labour hire licence and hosts with due diligence when entering into arrangements with labour hire providers.