Labour Hire Licensing – Deciphering the Grey Line
The retail industry has experienced its share of the spotlight with Fair Work Ombudsman prosecutions for breaches of workplace laws where retail workers have been short-changed on wages, loadings, shift and weekend penalties.
Readiness to confront the next gauntlet comes in the form of a labour hire licensing scheme, but not a national scheme as yet.
Like the disjointed Workplace Health and Safety (WHS) laws, we face different labour hire licensing laws depending on which state or territory the work is performed and arranged.
A national labour hire registration scheme has been touted to be on the way in high-risk sectors of horticulture, meat processing, cleaning and security sectors.
For now, we have state-based legislation in Queensland, Victoria and South Australia and authorities in these states who administer, conduct audits and inspections and enforce compliance with the legislation.
Whilst the initial intent was to prevent the exploitation of workers in the labour hire industry, the broad drafting of the legislation, at least in Victoria and Queensland, has far greater reach beyond traditionally recognised labour hire providers.
What do the laws say?
Labour hire licensing legislation operates in Queensland, Victoria and South Australia.
If you provide labour hire services without being licensed or you engage an unlicensed labour hire provider, you may be penalised.
Dates by which labour hire providers are required to apply for a licence to continue operating
|Queensland||15 April 2018|
|Victoria||30 October 2019|
|South Australia||1 November 2019|
The SA Government has announced its intention with a recent Bill amendment to narrow the scope of its existing scheme to labour hire providers who provide workers in horticulture processing, meat processing, seafood processing, cleaning and trolley collection.
The labour hire legislation is drafted more broadly in Queensland and Victoria and not limited to any specific industries or work performed.
There are some exceptions which may provide relief from the drafts’ panoptic-reaching claws. Examples include secondees, small body corporate, students and vocational placements, high income employees and within group providers of workers.
Maximum penalties for not being licensed, or engaging an unlicensed labour hire provider
|Queensland||*$400,350||*$137,987 or 3 years imprisonment|
|South Australia||$400,000||$140,000 or 3 years imprisonment|
* subject to annual indexation
Labour hire licensing authorities
There is a labour hire licensing authority in each state where the legislation operates. Each have inspectors who conduct investigations into potential breaches of the legislation and can schedule unannounced and targeted audits.
If a licence holder breaches the applicable Labour Hire Licensing Legislation, their licence may be cancelled or suspended, and they must immediately stop supplying workers.
Legal proceedings may commence when an inspector has obtained enough evidence and it is in the public interest to respond to the issue of non-compliance.
In less serious cases, a licensee may have conditions imposed on their licence to allow them to address the issue of non-compliance without requiring the business to cease operation.
Registered labour hire operators could be deregistered if they fail to engage in audits, pay the annual fee, comply with reporting obligations or commit a serious breach of other relevant laws including WHS, workers’ compensation, workplace, taxation, superannuation and migration laws.
The licensing application process involves consideration of a ‘fit and proper person’ test of each officer involved in decisions that affect at least a substantial part of the business.
Hypothetical scenarios outlined below are examples of the range of circumstances where the labour hire licensing scheme may apply to LFR businesses.
- Cleaning Services in commercial premises
Operators in the Victorian LFR sector who wish to continue engaging commercial cleaning services are required to ensure that the service provider has applied for a labour hire licence under the scheme by 30 October 2019.
In Queensland, the discussion is about whether cleaning is integral to the business that engages the cleaning company.
For example, an LFR centre contracts daily cleaning services for its large common areas and specifies the cleaning tasks to be carried out. Because of the schedule and scale of cleaning required, cleaning is deemed to be an essential day-to-day need for the centre. The cleaning company (subject to any applicable exclusions) would then be considered a labour hire provider under the Queensland legislation.
Another example is where a retailer engages a security business to provide guards to minimise instances of theft and to assist with any issues instore at the direction of store management.
In this scenario, both Queensland and Victorian Labour Hire Authorities are likely to conclude that the security business needs to be licensed.
This is because the security business supplies workers to perform a duty that is an essential part of the retailer’s business, i.e. the retailer is required to meet basic security and safety expectations of customers.
Security services are a specialist service and not a function of the normal operations of the retailer. The retailer is not in the business of providing security services, it sells products. This is a clear example of the breadth of reach of the legislation.
- Maintenance and Repairs
Where a maintenance contractor provides specialised maintenance services to its clients (e.g. an air conditioning maintenance contractor) and such maintenance is not an essential element of the retailer’s business or undertaking, the maintenance contractor is not likely to be a labour hire provider and does not require to be licensed under the scheme.
- Construction/Fit-out works
In the case of electricians involved in the construction and/or fit out of retail stores, the provision of them working for the building owner is likely to be deemed as an essential element of the retailer’s business and thus require the facilities manager to be licensed.
Due to the significant penalties that may apply for breaches of the legislation, it is worthwhile conducting a review of your business to determine on which side of the somewhat grey line you sit.
The content of this publication is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be discussed with your legal adviser before taking any action based on this publication.
Gina Capasso of KHQ lawyers has been working with her clients and advising on the application of this legislation to their specific operations and how to manage any risk exposure and ensure compliance, where required. Gina recently presented at the LFRA 2019 NSW Forum on 22 August on this topic.