In 2015, the Victorian Government commissioned an inquiry into the labour hire industry in Victoria. The inquiry was asked to investigate the practices of labour hire providers (agencies) with a focus on sham contracting, insecure work and the abuse of visas that avoid workplace protections and undermine the national minimum employment standards.
Professor Anthony Forsyth of the RMIT University School of Business and Law conducted the inquiry, ultimately recommending that Victoria establish a licensing scheme to regulate labour hire agencies.
The Victorian Government accepted the recommendations and passed the Labour Hire Licensing Act 2018 (Vic) (the Act) on 20 June 2018. The Act establishes a licensing system to regulate the provision of labour hire services.
Who does the Act cover?
The Act imposes obligations not only on the agencies that provide labour hire services, but also on the users of the services (hosts), if they procure labour hire services from an unlicensed business.
The threshold requirement for a business to be licensed is that it will ‘provide labour hire services’ pursuant to section 7(1) of the Act. This requires that:
- in the course of conducting a business
- it is providing individuals to perform work in and as part of a business or undertaking of the host.
The Act primarily covers engagement arrangements which are generally understood to be "labour hire" or "on hire" arrangements. It applies to engagement arrangements such as subcontracting arrangements or where an individual or individuals are supplied to perform work in and as part of the host’s business or where a person supplies a worker to a host's business in exchange for payment.
Factors that suggest an individual is working in and as part of the host’s business are:
- the work being performed at the host's premises
- the work is subject to the host's direction
- the individuals are supervised by the host or another labour hire worker supervised by the host
- the work is of a low‑skilled or low-paid nature and thus does not constitute provision of a specialised service
- the work is a key function of the host's business or undertaking or is of a similar nature to work performed or previously performed by the host's own employees.
It is clear that the Act will apply to conventional labour hire providers and will require them to obtain a licence. However, businesses that frequently perform work at the premises of their clients should carefully assess the criteria to ensure compliance.
It is important to note that the Labour Hire Licensing Regulations 2018 (Vic) (the Regulations) go further and deem several industries that the Victorian Government has identified as requiring the protections that are afforded by the Act. These are:
- commercial cleaning
- some horticulture activities where there is exercise of minimal judgment under direct supervision such as picking and labelling
- some meat manufacturing activities such as packing and processing.
Businesses that provide the above services will be considered agencies and required to apply for a licence by 30 October 2019.
Labour hire service agencies - application
Agencies that fall within the Act or the Regulations are required to apply for a licence by 30 October 2019. Agencies need to obtain and disclose the following information in their application:
- the number of workers supplied
- the types of visas held by workers
- whether an investigation by a regulator, or proceedings in a court or tribunal is on foot in relation to labour hire laws, workplace laws or minimum accommodations standards
- whether an incident has occurred in the preceding 12 months to which the Applicant was required to notify the regulator in relation to occupational health and safety or workers compensation.
Agencies must also meet the ‘fit and proper person’ requirement of the application.
Unlicensed agencies may be liable for penalties up to $126,856 for natural persons, or $508,424 for body corporates. Interestingly, hosts entering into arrangements with an unlicensed agency could be liable for the same.
Penalties can also be imposed on business that advertise, hold out, or are willing to provide labour hire services without a licence.
Post script: the newly-elected Coalition government proposed as part of its election policy to develop a national labour hire registration scheme for the four “high risk” industries of horticulture, meat processing, cleaning and security.