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Limelight Articles

Limelight 04/19

Labour hire law – licensing, liabilities and the looming deadline!

Authors, Philip Duffy , Nadine John

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 Act

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.

 Application requirements

 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
 

ConductVICQLDSA
Providing labour hire without licenceNatural persons:
up to $126,856
 
 
Bodies corporate:
up to $507,424
Individuals:
up to $130,439
or 3 years’ imprisonment
 
Corporations:
up to $378,450
Natural persons:
up to $140,000 or 3 years’ imprisonment
 
Bodies corporate:
up to $400,000
Entering into arrangements with an unlicensed labour hire service providerAs aboveAs aboveAs above
Advertising, holding out, or willing to provide labour hire services without a licence Natural persons:
up to $31,714
 
Bodies corporate:
up to $126,856
Up to $25,230Up to $30,000

 Powers

 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.

Impact

 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.

This publication constitutes a summary of the information of the subject matter covered. This information is not intended to be nor should it be relied upon as legal or any other type of professional advice. For further information in relation to this subject matter please contact the author.