Last year the Victorian Government passed the Labour Hire Licensing Act 2018 (Act). The Act legislates a scheme to regulate labour hire providers and labour hire users in Victoria (Labour Hire Participants). The scheme legislated by the Act will commence operation on 29 April 2019 and labour hire providers are required to have applied for licences under the Act by no later than 29 October 2019.
A similar labour hire licensing scheme operates in Queensland and under the Queensland scheme labour hire providers have been required to have licences since 15 June 2018.1 The Victorian Act indicates that if a labour hire provider is already registered in Queensland, subject to notification by the Victorian Labour Hire Licensing Authority (Authority), it will be recognised in Victoria.2
The Act:
- requires corporate and individual labour hire providers operating in Victoria to be licensed;
- states that labour hire licences will only be provided to corporate entities and individuals who are assessed to be ‘fit and proper’ persons by the Authority;
- provides the Authority with wide ranging enforcement powers and the capacity to seek to have penalties imposed upon:
- labour hire providers operating without licences; and
- labour hire users that obtain labour hire services from anyone other than licensed labour hire providers.
The Act has a 6 month transition period that gives labour hire providers from 29 April 2019 to 29 October 2019 to register online with the Authority to create an account and apply for a licence. Labour hire providers
that do not apply for a licence by 29 October 2019 will be prohibited from providing labour hire services from 30 October 2019. During the transition period, labour hire providers will not be subject to penalties if they do not have a licence and labour hire users will not be penalised if they use unlicensed labour hire providers.
After 29 October 2019, if the Act is breached, Labour Hire Participants risk civil penalties of up to $515,808 for bodies corporate or $128,952 for individuals. Penalties may also be imposed on directors or managers of Labour Hire Participants where they are personally involved in breaches of the Act.
The website for the Authority is: https://labourhireauthority.vic.gov.au/. The Authority is currently running a range of information sessions to explain how the Authority will operate.
Definition of ‘provides labour hire services’ under the Act
Under the Act a person ‘who provides labour hire services’ is defined as a provider, if:
- in the course of conducting a business, the provider supplies one or more individuals to another person (a host) to perform work in and as part of a business or undertaking of the host; and
- the individuals are workers for the provider of labour hire services within the meaning of ‘worker’ as defined by the Act.3
Definition of ‘worker’ under the Act
Section 9 of the Act prescribes the general meaning of ‘worker’ for a provider as an individual that has:
- an arrangement in force between themselves and the provider, under which the provider supplies, or may supply, the individual to one or more other persons to perform work; and
- the provider is obliged to pay the individual (in whole or in part) for the performance of the work by the individual, whether directly or indirectly through one or more intermediaries.4
The Act specifically states that an individual may be a worker regardless of whether the individual is an employee of the provider or whether a contract has been entered into between them and the provider of the labour hire services.
Regulations support the operation of the Act
Regulations have been developed to operate in conjunction with the Act (Regulations).
Importantly the Regulations prescribe individuals that are excluded from the definition of ‘worker’ under the Act and prescribe circumstances that have the effect of expanding the definition of a Provider.
The Regulations exclude from the definition of ‘worker’:5
- individuals that a labour hire provider supplies to another person to do work if the provider and the other person are each part of an entity or group of entities that carry on a business collectively as one recognisable business;
- directors of the labour hire provider who participate in its management or receives a profit share if the labour hire provider has no more than two directors;
- secondees (for example a lawyer seconded from a law firm to a client or a business consultant); and
- persons undertaking a vocational placement.
The Regulations also expand the circumstances an individual is taken to perform work as part of a business or undertaking to include:6
- a cleaner in a commercial premises;
- an individual performing a range of horticulture activities; and
- an individual performing a range of activities at a meat processing or meat manufacturing establishment.
Prohibited conduct under the Act
A Labour Hire Participant engages in prohibited conduct under the Act if they:
- provide labour hire services without holding a licence under the Act;7
- advertise or hold out that they provide labour hire services without holding a licence under the Act;8
- enter an arrangement for the provision of labour hire services unless the proposed provider of the labour hire services has a current licence under the Act;9 or
- enter into an arrangement with the purpose of avoiding obligations under the Act.10
The Act, like the Fair Work Act, contains an accessorial liability provision that may cause a third party to be liable for contraventions of the Act. A third party, such as a director or a manager of a Labour Hire Participant, that has aided, abetted, induced or been involved in contraventions of the Act may be deemed to have contravened the Act themselves and may be held personally liable for a civil penalty.11
Obtaining and maintaining a licence to ‘provide labour hire services’ under the Act
To obtain and maintain a licence, a labour hire provider will be required to pay a fee that is prescribed by the Regulations, make an application to the Authority, pay an annual licence fee and pay a renewal application fee when an application is made to renew a licence upon its expiry.
The Regulations (and the Authority’s website) indicate that the application fee (and the renewal application fee) for a licence ranges from $1,560.60 to $7,687.40 and the additional annual fee for the licence will range from 1,083.75 to $5,317.60 for the 2018/2019 financial year depending on the labour hire provider’s annual turnover.
In addition to providing identification information and information about the operation of the applicant’s business,12 an application to the Authority is required to include declarations that:
- each relevant person is ‘a fit and proper person’ and has not, in the preceding 5 years, been found to have contravened a workplace law or given an enforceable undertaking in respect of an alleged contravention of a workplace law;13
- each relevant person is compliant with its legal obligations in relation to a range of matters including tax, superannuation, OHS, workers compensation, migration and workplace laws;14 and
- the information that has been provided to the Authority is true and correct.
If the Authority decides an applicant is eligible for a licence it will grant a licence for up to 3 years.15 A licence is not transferrable16 and when the licence expires, or is due to expire, the labour hire provider must make an application to the Authority for it to be renewed.17
The Authority will give written notice of its decision in relation to an application for a licence and is entitled to impose conditions on the granting of licences.18
If the Authority believes on reasonable grounds that a labour hire provider is not complying with its obligations under the Act or the Regulations it may give a holder of a licence a notice to comply,19 vary the terms of the licence it has issued,20 suspend a licence21 or cancel a licence.22
Public register of labour hire providers
The Authority will maintain a list of licensed labour hire providers in Victoria on a register and will publish on the Authority’s website information associated with the licensed labour hire providers, including those whose licences have been suspended or cancelled by the Authority.23
Offences and other civil penalty provisions
The Act also provides for a range of other issues that are offences and may give rise to civil penalties being imposed.
Matters that may give rise to civil penalties being imposed include:
- failure to comply with a condition of a licence;24
- failure to comply with a notice issued by the Authority to remedy non-compliance;25
- failure to notify the Authority of changes in the information provided to the Authority and prescribed by the Regulations;26
- failure to ensure availability of nominated officers;27
- failure to make documents available for inspection or to retain documents for 6 years;28
- attempts to persuade another person not to comply with the Act;29 and
- refusal to employ, refusal to hire or engage or dismissal or termination of the employment or hiring engagement of another person because a person has complied or intends to comply with the Act.30
Matters that are offences under the Act include:
- failure to produce a licence upon request by an inspector, police officer or other prescribed person;31
- giving false and misleading information to an inspector or the Authority;32 and
- failing to comply with a notice to produce documents to an inspector of the Authority.33
The future of labour hire licensing in Australia
The regulation of labour hire has recently been a politicised issue. It is being pressed by the state and federal branches of the Australian Labor Party (ALP) and has, until recently, been opposed by state and federal branches of the Liberal and National Parties across the country.
The federal ALP’s policy is to regulate Labour Hire Participants at a federal level if it wins the next election. The Coalition has also recently said it will introduce a federal labour hire registration scheme for high risk sectors if it retains power and has allocated $27 million dollars in the budget to fund the scheme.34
Messages for labour hire users/hosts and providers
- Consider whether your business (or part of it):
a) falls within the definition of labour hire provider under the Act; or
b) uses a labour hire provider, including whether an exemption under the Act or Regulations applies.
- If you are a labour hire provider, ensure you make an application to apply for a licence before 29 October 2019.
- We expect the amount of information sought by the Authority will be substantial and it may be difficult for labour hire providers to collate. We recommend that labour hire providers start making applications as soon as possible after 29 April 2019.
- If you are a labour hire user/host, start asking your regular providers if they are aware of the new regulations. Before you engage a labour hire provider, after 30 October 2019, satisfy yourself that the labour hire provider is licensed by asking the labour hire provider to show their licence and checking that they are listed on the public online register administered by the Authority.
- Keep on top of legislative developments in the State and Federal Governments related to labour hire regulation across Australia.
- The Act is likely to cause labour hire providers to assess their general compliance with workplace laws and also create an administrative burden to satisfy the Authority. Labour hire users/hosts should anticipate providers will attempt to pass on increased costs to them as a result.
If you would like advice or assistance with any of the above issues, please contact a member of our Workplace Relations team.
1 Note: A similar scheme was legislated in South Australia and was scheduled to commence in 2018 but after the South Australian Election the new South Australian Government abolished the introduction of the scheme.
2 Section 112. Note: Currently there is no information on the Authority’s website about how mutual recognition across different states will operate.
3 Section 7. Note: Section 8 of the Act sets out an expanded meaning of ‘provides labour hire services’ for certain recruitment and placement services and contractor management services.
4 Subsection 9(1). Note: Subsections 9(2) and 9(3) provide an expanded definition of ‘worker’ that is for certain recruitment and placement services and contractor management services.
5 See Regulation 4.
6 See Regulation 5.
7 Section 13.
8 Section 14.
9 Section 15.
10 Section 16.
11 Section 95.
12 See Section 19 that lists the required information. It includes the number of workers supplied by applicants to hosts in past 12 months, industrial instruments, visas employees are covered by and industries provider operates in.
13 Section 22.
14 Section 23.
15 Section 26.
16 Section 27.
17 Section 28.
18 Section 25.
19 Section 37.
20 Section 38.
21 Section 39.
22 Section 40.
23 Sections 48 and 49.
24 Section 36.
25 Section 37.
26 Sections 33 and 34. The changes that require notification include that a relevant person is no longer a fit and proper person or no longer compliant with their legal obligations under the Act.
27 Section 45.
28 Section 67.
29 Subsection 86(1).
30 Subsection 86(2).
31 Section 46.
32 Section 87.
33 Subsection 67(5).
34 Media Release by Kelly O’Dwyer MP, Minister for the Department of Jobs and Small Business, ‘Standing up for vulnerable workers’, 7 March 2019 accessed at: https://ministers.jobs.gov.au/odwyer/standing-vulnerable-workers-0 on 21 March 2019.
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