Labour hire licensing scheme: what you need to know

This article was current at the time of publication.

Over the past several years the media has raised questions about sectors of the labour hire industry, with reports of wage theft, poor workplace health and safety practices, denial of worker rights, exploitation of vulnerable workers, phoenixing of companies, and more.

As a result, governments in Queensland, Victoria and South Australia have enacted labour hire licensing laws to protect workers from exploitation. There has been talk of a national scheme at federal government level.

“Labour hire licensing is about improving the transparency and integrity of the sector to protect workers from exploitation by labour hire providers and their hosts,” says Victoria's Labour Hire Licensing Commissioner, Steve Dargavel.

Who must be licensed?

Any business in Queensland, Victoria or South Australia that provides labour hire services, including certain types of secondments, must now be licensed.

Just as importantly, companies that host workers from a labour hire environment have a legal responsibility to ensure the provider is licensed. Fines of over $500,000 may apply to businesses that hire people from unlicensed providers.

“Pleasingly, there is less tolerance for unethical behaviour from employers in today's world,” says Leigh Sampson FCPA, CFO of specialist recruitment and workforce management solutions firm, Bayside Group.

What types of businesses does the new legislation cover?

The Labour Hire Authority in Victoria says a labour hire provider is, broadly speaking, a business that has an arrangement with one or more individuals under which the business supplies the individuals to perform work in, and as part of, a host's business or undertaking.

The provider may be obliged to pay the individual or there is an ongoing relationship such as providing accommodation or contract management services such as performance or payroll functions.

An individual is a worker for a provider if there is an arrangement between the individual and the provider under which the provider supplies the individual to perform work. This covers some secondees, as it also applies in some cases if the provider recruits or places the individual to perform work.

“Our engineering business in Victoria has had a few secondees out on client sites,” Sampson says. “We have, therefore, been required to register that business with a labour licence.

“Several variables apply, depending on whether you engage somebody specifically for that secondment position and whether the contract lasts beyond the secondment position, but it's absolutely worth checking if you send staff on secondments.”

In labour hire licensing laws, definitions and exemptions of secondees vary between states.

Victoria's Labour Hire Authority has run two advertising campaigns and more than 120 forums and stakeholder engagement events to promote the new legislation to the labour hire industry and its clients. The authority says it's important for labour hire hosts and providers to know their obligations to avoid penalties. The new laws cover using labour hire services without a licence, advertising for labour hire services without a licence, using an unlicensed labour hire provider and failing to report attempts to circumvent labour hire licensing.

The Victorian scheme took effect on 30 October 2019. After that, hosts can continue to use unlicensed labour hire providers as long as the providers have applied for a licence prior to 30 October 2019, and their application has not been refused.

There have been wide responses to the scheme from the labour hire industry, the authority says, including intelligence from providers and there has been a lot of useful feedback. Hosts and providers have generally indicated they are hopeful that licensing will level the playing field, meaning they are no longer competing with businesses seeking to profit from denying workers' minimum pay rates and conditions.

Some workers, the authority reports, have already claimed that their treatment has improved.

What the licence involves

Licences are granted after an organisation has proven its historical compliance with legal obligations, such as paying correct wages and superannuation and providing a safe place to work.

The process is not a simple one, Sampson says. “There’s a financial cost involved with paying the application fee and the ongoing fees, but there are also administration costs,” he says.

“We have a workplace relations team that managed the application process, but it was still a big effort across our multiple businesses, even though our quality systems are robust.”

Sampson hopes the scheme will help end wage theft and phoenixing activity and remove unscrupulous providers trying to exploit vulnerable workers. “Whether this is the mechanism that achieves this, time will tell,” he says.

Which states have labour hire licensing schemes?

 

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