On 26 June 2018 the Labour Hire Licensing Act 2018 (Act) was assented to after it passed the Victorian Parliament on 20 June 2018. The Act legislates a scheme to regulate labour hire providers and labour hire users in Victoria (Labour Hire Participants).
- requires corporate and individual labour hire providers operating in Victoria to be licensed;
- legislates that labour hire licenses will only be provided to corporate entities and individuals who are assessed to be ‘fit and proper’ persons by the Labour Hire Licensing Authority (Authority) that is established by the Act; and
- provides the Authority with wide ranging enforcement powers and the capacity to seek to have penalties imposed upon:
- labour hire providers operating without licenses; and
- labour hire users that obtain labour hire services from anyone other than licensed labour hire providers.
If the Act is breached, Labor Hire Participants risk civil penalties of up to $515,808 (corporate licence holders) or $128,952 (individual licence holders). Penalties may also be imposed on directors or managers of Labour Hire Participants where they are personally involved in breaches of the Act.
The parts of the Act that establish and enable the Authority to begin to develop the infrastructure to support the scheme were proclaimed on 27 June 2018.
The remainder of the Act will become law and commence when it has been proclaimed, but not later than 1 November 2019. The transitional provisions of the Act provide for a six month transition period, which means that labour hire providers will not be required to obtain licenses to operate until January 2019 at the earliest. During the six month transition period, Labour Hire Participants will not be penalised under the Act.
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.1
Definition of ‘worker’ under the Act
Section 9 of the Act prescribes the general meaning of a ‘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.2
The Act specifically states that an individual may be a worker regardless of whether the individual is an employee of the provider and regardless of whether a contract has been entered into between them and the provider of labour hire services.
Regulations to support the operation of the Act
Regulations are being developed and will operate in conjunction with the Act (Regulations). The Victorian Government has released an exposure draft of the Regulations.
Importantly the Regulations will:
- prescribe providers of labour hire services that are exempt from having to be licensed under the Act; and
- individuals that are excluded from the definition of ‘worker’ under the Act.
The exposure draft of the Regulations exclude from the definition of worker:
- 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 entitles 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 will set out any forms and fees related to obtaining licenses as well as transitional arrangements for the implementation of the scheme provided for in the Act.
Prohibited conduct under the Act
A person engages in prohibited conduct under the Act if they:
- provide labour hire services without holding a license under the Act;3
- advertise or hold out that they provide labour hire services without holding a license;4
- 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;5 or
- enter into an arrangement with the purpose of avoiding obligations under the Act.6
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 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.7
Obtaining and maintaining a license to ‘provide labour hire services’ under the Act
To obtain a license, a labour hire provider will be required to pay a fee that will be prescribed by the Regulations, make an Application to the Authority and pay an annual license fee to the Authority.
The exposure draft of the Regulations indicate that the application fee for a licence will range from $1,560.60 to $7,687.40 and the annual fee for the licence will range from $1,083.75 to $5,317.60 depending on the labour hire provider’s annual turnover.
In addition to providing identification information, 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 five years, been found to have contravened a workplace law or given an enforceable undertaking in respect of an alleged contravention of a workplace law;8
- 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;9and
- the information that has been provided to the Authority is true and correct.
The Authority, if it decides an applicant is eligible for a license, will grant a license for up to three years.10 When a license has expired, or is due to expire, the labour hire provider must make an application to the Authority for it to be renewed.11
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 license a notice to comply,12vary the terms of the license it has issued13, suspend a license14 or cancel a license.15
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 a website information associated with licenced labour hire providers, including those whose licenses have been suspended or cancelled by the Authority.16
Politics is relevant to the fate of the Victorian Act and Labour Hire Regulation in Australia
The regulation of labour hire is a politicised issue. It is being pressed by the state and federal branches of the Australian Labor Party (ALP) and opposed by the state and federal branches of the Liberal and National Parties across the country. State ALP governments assert they have acted to regulate labour-hire because of a failure of the Federal Government to take action to prevent exploitation.17 The Federal Opposition has given strong policy indications it will regulate labour hire operators and participants if it wins power at the next Federal election.18 The current Coalition Federal Government has no intention of introducing a national scheme.
The politicised nature of labour hire regulation is demonstrated by the divergent implementation of the legislation passed in 2017 in Queensland and South Australia under ALP governments. The Queensland ALP retained power in November 2017 and the South Australian ALP lost power in March 2018.
The Queensland Parliament has since pressed forward with its labour-hire scheme, which is now fully operational, but the implementation of the South Australian scheme has faltered. The new Liberal South Australian Government indicated it will not enforce the licensing requirements of the South Australian scheme until at least 1 February 2019 to “allow sufficient time for issues raised to be appropriately addressed” and reports have emerged that the entire scheme may be under review.19
The ultimate fate of the Act may rest on the outcome of the Victorian election on 24 November 2018 and the regulation of labour hire providers across Australia may be dependent on the result of the next Federal Election, which must occur no later than 2 November 2019.
Messages for labour hire users/hosts and providers
- Keep abreast of the legislative developments in the State and Federal Governments related to labour hire regulation across Australia.
- Consider whether your business (or part of it) falls within the definition of labour hire provider or uses a labour hire provider, including whether an exemption applies.
- If you are a labour hire provider ensure you are aware of when you are required to obtain appropriate licenses in Victoria and South Australia. If you also operate in Queensland, make sure you have the appropriate license.
- If you are a labour hire user/host, before engaging a labour hire provider, 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 register administered by the Authority.
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 should expect increased costs to be passed on to them as a result.
If you would like advice or assistance in relation to the labour-hire licensing scheme, please contact a member of our Workplace Relations team below.
1. S.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.
2. 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.
6. S.16 and s.17
16. S.48 and s.49.