Labour Hire Arrangements – Providers
In 2018, Victoria became the third state in Australia to pass legislation (the Labour Hire Licensing Act 2018 (the “Act”) that implemented labour hire licensing requirements. With the implementation of this Act providers and host employers now have obligations they need to comply with otherwise they face heavy penalties for any unlawful conduct.
What is labour hire
This is the practice adopted by companies that require workers but do not necessarily want to employ their own staff. These companies go through a labour hire agency who provide them with workers for a set period of time. Companies benefit from such an arrangement as they are not the employer of that worker and therefore do not need to comply with provisions around leave entitlements, superannuation, severance payments, etc.
Labour hire agencies themselves employ labour hire workers as casuals or independent contractors.
In this article we specifically focus on the obligations and administrative requirements for labour hire agencies. In our other article we focus on the arrangements from a host employer’s (client’s) perspective: https://constructivelegalsolutions.com.au/labour-hire-arrangements-host-employers/
Who is a labour hire service provider
The Act provides that a provider provides labour hire services 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. An individual is a “worker” if:
- An arrangement is in force between the individual and the provider under which the provider supplies them to others to perform work;
- The provider is obliged to pay the individual (in whole or part) for the performance of the work either directly or indirectly through one or more intermediaries.
A provider is deemed to be providing labour hire services regardless of whether:
- There is a contract between the provider and the host employer
- The provider supplies the workers directly or through an intermediary; or
- The work is performed under the control of the provider or host.
Other services that may require a labour hire licence includes where the provider recruits or places individuals with a host to perform work and the provider procures or provides accommodation and pays wages to those individuals and where the provider recruits or places individuals as independent contractors to perform work in a host business and manages the contract performance by the independent contractors.
Who can hold a licence
For a provider to hold a licence they must clear a “fit and proper person” test. A person is fit and proper unless:
- In the past 10 years the person was guilty of an indictable offence or offence involving fraud, dishonesty or drug trafficking
- In the past 5 years the person has not complied with workplace laws, labour hire laws or minimum accommodation standards
- In the past 5 years has had their licence cancelled, suspended or revoked
- In the past 5 years the applicant was a body corporate and was disqualified from managing corporations
- Any other prescribed circumstances in section 22.
When applying for a licence, the “fit and proper person” test is just but one requirement of the application process. Applicants will be required to disclose:
- The number of workers supplied
- The types of visas held by workers
- Whether any investigations by a regulator or proceedings in courts in relation to labour hire laws is on foot
- Whether in the last 12 months there were any required notifications to the regulator around health and safety or workers compensation
- A declaration that the applicant has complied with all of its legal obligations
If an applicant is successful and attains a licence, the licence is valid until its expiry which is up to 3 years from being granted. At expiry, the licence can be renewed.
Certain providers are exempt for the requirement of needing a licence to operate.
If the workers being supplied are considered secondees, the provider does not require a labour hire licence. A secondee is an employee provided to another business on a temporary basis but are expected to return to their original workplace to perform work there after a specified period of time. This exemption cannot be relied upon if the provider’s main function is to supply workers to other business. If all workers are secondees, it is likely the provider needs to be licensed.
Another example where an exemption applies is where a company that is part of a group sends its employee across to another company part of the same group to perform some work.
Under the Act, a labour hire agency is prohibited from providing or advertising labour hire services without a licence.
Where there is a contravention, civil penalties apply with the maximum penalty (for certain contraventions) being 800 penalty units for an individual and 3,200 penalty units for a corporation. At the time of this article, 1 penalty unit is valued at $181.74.
If you are intending on becoming a provider for labour hire services and require advice on application for the licence or have any exemption questions, you may contact us on you may contact us on firstname.lastname@example.org or 1300 972 092.
We are also able to assist with drafting a labour hire agreement and have a labour hire briefing document that can be made available to you on request.