South Australia and Queensland have recently introduced new labour hire licensing legislation to provide greater protections for workers and accountability for employers in the labour hire industry.

While the schemes differ in each state, each scheme includes the following features:

  • A person must not provide labour hire services, or advertise that they are a labour hire provider, unless they hold an authorised licence under the applicable legislation to do so.
  • A person must not enter into an arrangement for the provision of labour hire services except with a labour hire provider who holds a licence under the applicable legislation.
  • A person must not enter into an arrangement to avoid the operation of the labour hire licensing legislation.
  • A person must report an arrangement to avoid the operation of the labour hire licensing legislation.

Fines and penalties are imposed for contravention of these provisions under the schemes in South Australia and Queensland. These fines range in value depending on the contravention, up to $400,000 for a body corporate in South Australia and up to $378,450 for a body corporate in Queensland (based on the current value of a penalty unit in Queensland).

The legislation in each state defines “labour hire services” and “labour hire provider” broadly as circumstances where a person, in the course of carrying on a business, supplies to another person a “worker” to do work. The definitions are sufficiently broad so as to capture the provision of services by traditional “labour hire businesses” and circumstances where labour services are provided as part of the provider’s business, even though this is not a core component of the provider’s business. All labour hire providers that meet this definition must be licensed.

Limited exclusions apply. In Queensland, labour hire providers will be excluded if the workers whose services are being provided:

  • receive annual wages equal to or higher than the High Income Threshold (currently $142,000);
  • are “in-house employees” provided on a temporary basis, such as a lawyer seconded to a client for a period of time;
  • are executive officers of a corporation and the only individual provided under the labour hire arrangement; or
  • are provided between related entities, or entities which carry on a business collectively as a single recognisable business, such as joint ventures.

In South Australia, the legislation does not currently provide express exclusions. However, exemptions can be granted by the Consumer and Business Services South Australia.

An important feature of the scheme in each jurisdiction is that a person will be prohibited from being the responsible person for a labour hire licence if they are not a “fit and proper person”. However, the schemes in each state contain slightly different definitions of a “fit and proper person”.

In South Australia, in determining whether a person is a fit and proper person to hold a labour hire licence, or be the director of a company that holds the licence, any relevant matter can be taken into account, including the person’s character, their compliance with relevant workplace laws, and whether they have sufficient knowledge and experience to run a labour hire business. However, a person will not be a fit and proper person to hold a labour hire licence if they have been found guilty of a prescribed offence, or are a participant in a prescribed organisation, or a close associate of a person who is a member of a prescribed organisation or subject to a control order for organised crime, are insolvent or under administration, were (in the case of a company) wound up for the benefit of creditors in the preceding 5 years, or (in the case of an individual) a director of such a body corporate.

In Queensland, matters substantially similar to the legislation in South Australia must be considered, but there is no automatic prohibition on a person being a fit and proper person as there is in South Australia.

The scheme in Queensland has a 60-day transitional period ending on 17 June 2018 by which time all eligible labour hire providers must register and apply for a licence if they intend to continue providing labour hire services. The scheme in South Australia has a 6-month transitional period ending 1 September 2018, and the proposed scheme in Victoria is also intended to have a 6-month transitional period.

Similar legislation is before Parliament in Victoria, however, this legislation is more extensive than the legislation in South Australia and Queensland. The proposed Victorian scheme will establish a Labour Hire Licensing Authority which will prosecute contraventions of the legislation and obtain civil penalties, similar to the Fair Work legislation. This legislation has been read a second time in the Legislative Council and is currently being considered by Committee.

Other States and Territories and the Commonwealth

So far, no other States or Territories have announced labour hire licensing legislation. The Victorian Government requested that the Commonwealth pass labour hire licensing legislation that operates nationally, however, to date no plans have been announced to table such legislation before the Commonwealth Parliament.

Time to Prepare

Those who provide labour hire services, or who contract with labour hire providers in South Australia, and Queensland should start preparing for the commencement of the legislation in those States. Labour hire providers will need to make an application to become a licensed provider during the transitional period in the relevant State. Such applications will require consideration as to whether the proposed license holder is a fit and proper person within the definition in the relevant legislation, including whether the license holder has contravened any relevant workplace law.

Users of labour hire services in those States will need to ensure that any labour hire providers they engage with are licensed under the relevant State scheme, or have made application to be licensed within the transitional period, and those applications have not been refused. This may require amendment to contractual arrangements with labour hire providers to ensure compliance with the relevant labour hire licensing scheme is a requirement of the relationship.

Providers and users of labour hire services in Victoria should monitor the proposed labour hire licensing laws in that State, which are expected to pass in the State Parliament shortly.