By Winnie Lok, Solicitor
29 July 2019
New legislation has been introduced in various Australian states to protect vulnerable workers employed through labour hire companies, in response to growing concerns over their treatment. The new laws place responsibility on labour hire providers and their users to ensure that labour hire workers receive the same working conditions and wage as direct employees. These laws are intended to apply to traditional labour hire models but could potentially have broader application to the business supply chain and contracting arrangements. This could extend to compliance considerations for agencies, where workers are provided by one company to another company, depending on the contracting model.
What you need to know
The new labour hire legislation is currently in effect in Queensland, South Australia and Victoria. Under this legislation, labour hire services are now required to become licensed providers by satisfying a number of standards which vary depending on the State they are based in. A provider of labour hire services is anyone that, in the course of carrying on a business, supplies to another person a worker to perform work. Licence holders are monitored through reporting obligations which detail workers supplied and arrangements entered into, and any other relevant information to prove compliance.
The new laws impose significant penalties for non-compliance. It places equal accountability on both labour hire providers and businesses that engage with labour hire providers for workers. If found in breach of the scheme, unlicensed providers and their users face similar penalties. Depending on the State, individuals may face civil or criminal penalties.
Each of the three States has adopted its own legislation with varying components.
With QLD being the first to enact the new labour hire laws, the Labour Hire Licensing Act 2017 (Qld) commenced on 16 April 2018 and is now fully operational. This means that all labour hire services that operate in QLD must currently hold a licence.
A licence is valid up to one year from the registration date and upon expiry, labour hire providers must apply for a licence renewal. An applicant must prove to the QLD Office of Industrial Relations that they are a fit and proper person and that their business is financially viable and complies with relevant laws to be granted a licence. A licensed provider is subject to 6-monthly reporting obligations.
Under the Labour Hire Licensing Regulations 2018 (Qld), certain individuals are not to be interpreted as workers under the Labour Hire Licensing Act. This includes taking into consideration an individual’s annual wages; where a company provides its own executive officer to work for another business (which could include consultants who are incorporated); in-house employees supplied to another business on a temporary basis (which can include secondments); and where the provider and the other business carry on business collectively as one recognisable business that provides services other than supplying on-hire workers.
The Labour Hire Licensing Act applies inside and outside QLD to the extent of the State’s extraterritorial legislative power. If a provider or user does not comply with the scheme, individuals can face up to $134,989 in fines or 3 years of imprisonment while corporations are subject to a civil penalty of up to $391,650.
The Labour Hire Licensing Act 2017 (SA) commenced on 1 March 2018. With an extended transition period, all labour hire providers must lodge their licence application by 31 August 2019 and be licensed by 1 November 2019. The duration of a licence in SA is indefinite unless surrendered or cancelled, or the licence holder ceases to exist.
Similar to QLD, a provider must pass a fit and proper person test to be granted a licence. It must prove to the SA Business and Consumer Services that it has sufficient business knowledge, experience and financial resources to properly conduct business under the licence. Approved licence holders will be published in a register and be subject to annual reporting. In contrast to QLD and Victoria, there are as yet no clear carveouts in the regulations from the definition of a worker, however the Labour Hire Licensing Act itself does give some guidance on this.
The Labour Hire Licensing Act applies to all work supplied from SA regardless of whether work is conducted in or outside the State. Individuals who are found in breach are subject to penalties of up to $140,000 in fines or 3 years of imprisonment, corporations face fines of up to $400,000.
The Victorian legislation is the last of the three to come into force. Commencing on 29 April 2019, the Labour Hire Licensing Act 2018(Vic) requires that labour hire providers apply for a licence by 29 October 2019 to continue to operate. The licence will be valid for up to three years from the date after registration and upon its expiry, labour hire providers are required to apply for a licence renewal.
In order to be granted a licence, an applicant must satisfy the newly established Labour Hire Licensing Authority that they are a fit and proper person and make declarations that their business complies with legal obligations including taxation laws, superannuation laws, occupational health and safety laws, workplace laws, migration laws and applicable minimum accommodation standards. Once the application is granted, the provider will be published in the Register of Licensed Labour Hire Providers and will be required to report to the Labour Hire Licensing Authority every 12 months.
Similar to QLD, the Labour Hire Licensing Regulations 2018 (Vic) provides limitations to the definition of a worker and therefore when the Labour Hire Licensing Act does not apply. This includes classes of secondees; where the provider and the other business carry on business as one entity that is not predominantly in the business of providing services of workers to other persons; where a labour hire provider is a corporation and provides its own executive to perform work for another business; and persons employed by a public sector, students and vocational placement workers as defined under its relevant legislation.
The Labour Hire Licensing Act applies to work performed within and outside Victoria provided that arrangements are made in Victoria. Unlike QLD and SA, non-compliance with the Labour Hire Licensing Act will only result in civil penalties. For individuals, there is a maximum threshold of $128,952 in penalties and $515,808 for corporations.
What about the other States?
There have not been any recent inquiries conducted in any other States to introduce a labour hire licensing scheme. However, the New South Wales Labor party has expressed that it intends to adopt a similar regime if elected.
What does this mean for you?
In the case of advertising or media agencies, this should generally not impact on agencies that contract with a client for the provision of services and the agency uses its own workforce (which is a typical contract model). However, it could potentially start to have application to more unusual labour arrangements. For instance, if the client requires the agency to provide contractors to it, on specific placements, where the client approves the contractor, pays for the contractor’s services directly and controls the terms of their work closely. Similarly, it may apply to agencies if they use the services of labour hire companies to source contractors.
If you are a provider of labour hire services, you must currently hold or register for a licence under the relevant State.
If you or your business engage with services that provide on-hire workers from QLD, SA or Victoria, you will need to ensure that these providers either:
- Currently hold a registered licence; or
- Have applied for a licence; or
- Have intentions to apply for a licence (please note impending deadlines for licence registration).
It is strongly recommended that you review any agreements you have with labour hire companies and implement internal policies and procedures to ensure you are complying with the requirements under the new labour hire laws. Take care with arrangements with clients for the supply of workers on more of a contract basis, it would be prudent to review these arrangements to avoid unforeseen compliance responsibilities.
If you would like further information on how these new labour hire laws impact you or your business, please contact us. We can provide tailored legal and practical advice to assist you with compliance with the labour hire legislation.