State By State: Labour Hire Licensing Laws | 2022 Update

Labour hire licensing laws continue to be a hot topic in Australia’s media. It’s a topic we’ve covered in the past, and one that remains an important issue in our post-COVID economic recovery.

Over the past several years there have been multiple issues raised in the media and across industry, regarding the labour hire industry. Damning reports of of consistent denial of worker’s rights, wage theft, sub-standard workplace health and safety practices, the seemingly ongoing exploitation of some categories of vulnerable workers, phoenixing of companies, and more.

(Side note: what’s phoenixing? From “Phoenixing is an illegal practice that involves company directors transferring assets of an existing company to a new company, leaving the old company with the existing debt. The old company is then placed into liquidation, but as the company no longer has any assets there is nothing to be used to cover these debts.”)

As a result of these reports and abhorrent practices, governments in Victoria, South Australia and Queensland have sanctioned labour hire licensing laws to protect workers from exploitation. Interestingly, there are now indications that a national scheme at federal government level will be established. However, this is yet to be announced from the new Labor government.

“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.

Labour Hire Licensing: Who Must Be Licensed?

Any business in Victoria, South Australia and Queensland that provides labour hire services, must now be licensed. This includes where the labour hire company or the host company, engages in the secondment of workers to other organisations (more on secondments below).

And importantly, the organisations that engage labour hire companies, and host labour hire workers in their business, are now on the hook. These host companies have a legal responsibility to ensure the provider they’ve engaged is licensed. If not, they could be up for fines of over $500k.

As you can see, there is way less tolerance today for unethical behaviour from employers. So no matter where you’re based in Australia, you must get across the state-based rules, and keep an eye out for forthcoming federal rules.

What Categories of Businesses Does Labour Hire Licensing Legislation Cover?

According to the Labour Hire Authority in Victoria:

[…] 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 labour hire provider may be obliged to pay the individual an agreed remuneration. Or, there are other scenarios like for example, where there’s an ongoing relationship with the worker such as providing accommodation; or the labour hire provider offers contract management services such as performance management of the worker; or they provide a payroll function.

An individual is a worker for a labour hire provider. Typically, there is an arrangement between the individual and the labour hire provider under which the provider engages the individual to perform a set schedule or type of work. This covers some secondees, as it also applies in some cases if the provider recruits or places the individual in an outside business, to perform this work.

Here’s an example: a consulting business in Victoria has had a number of seconded working on client sites. As a result, the consulting business is now required to register their business with a labour hire licence.

There are variables here however: these include, whether you engage someone specifically for that secondment position, and whether the contract will likely last beyond that secondment position. So in summary, it’s worth checking the rules if you have staff out on secondments.

The Differences Between States

Across the labour hire licensing laws in Australia, 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
  • Failing to report attempts to circumvent labour hire licensing.
There have been widespread responses to the scheme from the labour hire industry. These insights include intelligence from providers indicating they are hopeful that licensing will level the playing field.

This means, legitimate businesses with a licence will no longer have to compete with shady businesses seeking to boost profits by denying workers’ minimum pay rates and healthy, safe conditions.
Some workers, the authority reports, have already claimed that their treatment has improved.

What Does the Licence Involve

Licences are granted once an organisation proves historical, retrospective compliance with their legal obligations associated with their workers. These include paying the correct wages, paying superannuation, ensuring all other statutory obligations are in place, and providing a safe place to work.

The process is not simple as there is a financial cost associated with paying the application fee and the ongoing licensing fees, in addition to administration costs. Some businesses have dedicated workplace relations teams managing the various processes, especially if they are running multiple businesses.

It is hoped the scheme will end wage theft, phoenixing activity, exploitation of workers and remove unscrupulous providers trying to exploit vulnerable workers. But of course, only time will tell.

Labour hire licensing laws

For South Australian labour-hire licensing information, click here.
For Victorian labour-hire licensing information, click here.
For Queensland labour-hire licensing information, click here.

And finally, please do contact us if you have any feedback or comments.
As one of the world’s leading providers of contingent worker management solutionsCXC is well positioned to optimise all elements of your contingent workforce strategy.
If you are interested in discussing Australia’s labour hire licensing laws, please contact us.