New labour hire licensing law in Victoria – is your business compliant?

In June 2018, Victoria passed the Labour Hire Licensing Act 2018 (Vic) (“Act”). The Act follows a 2015/2016 inquiry by Andrew Forsyth (“Inquiry”) into the labour hire industry. The Inquiry ultimately found there were widespread issues with ‘rogue’ operators underpaying and exploiting workers within the industry.

Ultimately, the purpose of the Act is to prevent workers from being exploited by labour hire providers / host organisations and to improve the transparency and integrity of the labour hire industry.

Who does the Act apply to?

The Act came into operation on 29 April 2019 and will apply to:

• labour hire providers; and
• host organisations who engage labour hire workers.

Under s 7 of the Act, a business is a labour hire provider if, in the course of conducting a business:

• they supply individuals to a host organisation to perform work in and as part of that host organisation; and
• the individuals supplied are still employed by the labour hire provider.

What changes does the Act provide?

The key changes introduced by the Act include:

• requiring labour hire providers to obtain a licence (which requires the provider to pass a ‘fit and proper person test’ and pay an annual licence fee);
• establishing a publicly accessible register of labour hire providers;
• requiring host organisations to use licensed labour hire providers;
• requiring businesses to demonstrate compliance with workplace, superannuation, tax, safety and migration laws as well as applicable minimum accommodation standards; and
• monitoring and investigating compliance to ensure rogue operators are liable by imposing hefty penalties.

Who is excluded under the Act?

Under the Act there are some classes of workers who are excluded, including:

• secondees within the meaning stipulated in reg 3 of the Labour Hire Licensing Regulations 2018 (Vic);
• a worker within a group (i.e. a worker where the provider and the host are each part of an entity or group of entities that carry on a business collectively as one recognisable business)
• public sector employees;
• students;
• vocational placements; and
• a business that has been granted an exemption from the requirement to be licensed.

Prohibited conduct and penalties for a breach?

Civil and criminal penalties may apply for:

• labour hire providers who do not have a licence (see s 13);
• a person/business who is willing to advertise or in any way hold out that they provide, or are willing to provide, labour hire services without a licence (see s 14);
• host businesses who have entered into labour hire arrangements with providers who do not have a license (see s 15); and
• a person from entering into arrangements for the supply of workers that they know, or have reasonable grounds to suspect, are designed to circumvent or avoid obligations under the Act (see s 16).

The maximum fine for breaches of the Act are approximately $125,000 of individual licence holders or managers and directors who are personally involved in breaches and more than $500,000 for corporations.

Demonstrating the seriousness of this ‘crack down’, a Queensland magistrate recently imposed the first conviction under similar Queensland labour hire legislation. In making their decision, the magistrate noted the company’s deliberate decision to flout the Queensland licensing requirements and imposed a $60,000 fine for a first offence.

What do the Wizards say?

Labour hire providers will have until 29 October 2019 to apply for a licence before being penalised. If you are unsure whether your business is using an appropriately licensed labour hire provider or whether your business requires a labour hire licence, you should carefully review the applicable legislation in your State to ensure you do not receive a penalty.

Alternatively, if you need some specialist external help on labour hire licensing – or any other workplace issue – please get in touch. We offer a complete range of employee management and workplace relations services, giving you professional advice. For specialist assistance, Just call Workplace Wiizards on 03 9087 6949 (or email at support@workplacewizards.com.au)