Labour Hire Licencing Act in Australia: What you need to know

The Labour Hire Licensing Act 2018 (the “Act”) was enacted and came into effect in Victoria on 29 April 2019. This made it the third Australian state, following Queensland and South Australia, to enact such laws.

A similar scheme is expected to be in the pipeline for the Australian Capital Territory. The Federal Government has also formed a coalition which proposed to establish some form of labour-regulating scheme. Nothing has yet been announced for Western Australia, the Northern Territory, or the New South Wales. But given the national trend, it may be prudent to keep oneself informed of what the Act entails.

What is the Act?

Put simply, in an effort to combat the exploitation of workers, the Act requires businesses providing labour services in exchange for remuneration to be licensed. The Act also renders it unlawful for anyone to engage the services provided by an unlicensed labour–hire provider.  

Who does it apply to?

As the above suggests, the Act applies to a labour–hire services provider. A company is deemed to be a labour–hire services provider if it:-

• • Supplies workers to a business, a “host”, to perform work for the host; and
    
  • Said worker is a worker of the company.

Such companies must, under the Act, apply for a license and be listed on the state’s Public Register. Hosts are also required to only engage workers sourced from a licensed company.

There are, however, as shown below, several classes of people exempt from the Act’s requirements.

What does one have to do in the application?

The application process varies for each state. For instance, a Victorian business may apply through the local Labour Hire Authority’s website. The Victorian regime also has the following requirements:-

The applicant business will have to demonstrate that it and its key personnel (such as directors) are able to satisfy the “fit and proper persons” test. 

• An applicant, be it a natural person or a body corporate, will not be found “fit and proper” if it has, within the last:
• • • 10 years, been found guilty of an indictable offence against a person, or an offence involving fraud, dishonesty or drug trafficking that was punishable by imprisonment of 3 months or more (or an equivalent offence committed outside Victoria);

• • • 5 years, have been found to have contravened some form of workplace law, labour–hire industry law, or minimum accommodation standards;
    • 5 years, had his or its license under a labour–hire industry law cancelled, revoked or suspended involuntarily;
    • 5 years, been insolvent or under external administration;
    • 5 years, where the applicant is a body corporate, an officer was an officer of another body corporate whose license was cancelled, revoked or suspended involuntarily; or
    • 5 years, the applicant was an officer of a body corporate and was disqualified from managing corporations under the Corporations Act 2001 (Cth).

• The applicant will have to collate and provide information in respect of its operations and employees, including an Annual Report on their labour hiring activities.
• Applicants are required to demonstrate an understanding of and compliance with a number of laws, including taxation, superannuation, occupational health and safety, workers compensation, workplace, migration, and labour–hire industry laws.
  
• If an applicant has not, at the time of application, commenced business yet, he or it will have to declare that there is already a formulated plan to comply with the above mentioned laws, and be ready to submit said plan upon request.
  

There are also a number of payable fees for the application and renewal of a license, as well as an annual fee. The actual fees for a Victorian business depend on its turnover (Note: for new businesses, which category it falls under depends on its projected annual turnover in the current and subsequent financial year):

What are the exempted classes under the Act?

A business involving the following classes of workers are excluded from the Act:

• Workers employed by a single business on a regular basis, but are provided to work in another business on a temporary basis, with the expectation that they will eventually return to their original place of employment;
  
• Workers provided to another business which is a part of the same entity or group of entities as the providing business;
  
• A director who participates in the management or share of profits of a body corporate that has no more than 2 directors;
  
• Public sector employees seconded or transferred to work for another person;
  
• Students; and
  
• Vocational placements.

Is the Act extraterritorial in effect?

Yes. The Act applies to Victorian businesses’ engagements and arrangements in terms of work performed within Victoria. As well as arrangements made in Victoria in respect of work performed outside of Victoria.

Penalties

A labour–hire provider who fails to comply with the Act’s requirements, and who advertises that they provide labour–hire services or actually provides labour–hire services, shall be subject to maximum penalties exceeding $120,000 for natural persons and $500,000 for body corporates.

Conversely, hosts who engage the services provided by unlicensed labour–hire providers shall incur maximum penalties exceeding $120,000 if a natural person and $500,000 if a body corporate.

Conclusion

The Act is borne from legislative intention to ensure the legitimacy of labour–hire providers and the wellbeing and rights of vulnerable workers. As such its measures are strict and penalties non-negligible. As the relevant framework between the states are largely similar but not identical, the above aims to provide a comprehensive overview of the Act through outlining the rules in Victoria.

Businesses should pay attention to the scope and rules in their own states.