New legislation regulating the engagement of labour hire workers has been passed in Queensland and South Australia. Draft legislation has also been introduced in the Victorian Parliament, which has passed through the lower house and is expected to pass into law in the coming weeks.

The new legislation in these States has the capacity to impact a broad range of employment arrangements, including – potentially – the supply of workers from one entity to another, within the same group of companies.

In this update, we look at some key provisions in the legislation and how it may impact business engaging workers via another entity.

Summary of new legislation 

The relevant legislation is summarised in the following table:

State Legislation Commencement date[1]
Queensland Labour Licensing Act 2017 (Qld) 16 April 2018
South Australia Labour Hire Licensing Act 2017(SA) 1 March 2018
Victoria Labour Hire Licensing Bill2017 (Vic) Expected to be passed and to commence operation in the coming weeks

Key obligations

The legislation across the three States is not identical, however, has substantially similar terms. The general purpose of the legislation is to establish a mandatory scheme to protect workers in the labour hire industry from being exploited, and will require, among other things:

  • Labour hire providers operating within the relevant State (including providers that are based interstate or overseas but provide services/workers that operate within that State), to be licensed.
  • Labour hire providers to pass a “fit and proper person test” to be eligible to obtain a licence. The legislation in each State sets out the requirements/considerations for a person to be considered a “fit and proper person”. In Queensland and South Australia, regard will be had to the person’s character, their history of compliance with relevant laws and whether the person has been an insolvent under administration.[2] Under the Victorian draft legislation, the test is focused on the conduct of the person, including whether they have been found guilty of certain offences.[3]
  • Businesses that utilise labour hire services to only use the services of a licensed labour hire provider in accordance with the relevant State legislation.

Definitions 

The key definitions in the relevant legislation are set out in the table below.

  Queensland Labour Hire Licensing Act 2017 (Qld) South Australia Labour Hire Licensing Act 2017 (SA) Victoria Labour Hire Licensing Bill 2017 (Vic) – yet to be passed
Meaning of labour hire A person (a provider) provides labour hire services if, in the course of carrying on a business, the person supplies, to another person, a ‘worker’ to do work[4] A person (a provider) provides labour hire services if, in the course of conducting a business, the person supplies, to another person, a ‘worker’ to do work in and as part of a business or commercial undertaking of the other person[5] A person (a provider) provides labour hire services if in the course of conducting a business, the provider supplies one or more individuals to another person (a host) to perform work in and as part of a business or undertaking of the host and the individuals are ‘workers’ for the provider[6]
Meaning of worker An individual is a worker for a provider if they enter into an arrangement with the provider under which the provider may supply, to another person, the individual to do the work, and the provider is obliged to pay the worker, in whole or part, for the work[7] An individual is a worker for a provider if they enter into an arrangement with the provider under which the provider may supply, to another person, the individual to do the work, and the provider is obliged to pay the worker, in whole or part, for the work[8] An individual is a worker, for a provider, if an arrangement is in force between the individual and the provider under which the provider supplies, or may supply, the individual to one or more other persons to perform work; and the provider is obliged to pay the individual (in whole or part) for the performance of the work by the individual, whether directly or indirectly through one or more intermediaries[9]

Application of the legislation

Given the above definitions, the obligations in the respective legislation could potentially apply to a broad range of arrangements, including, perhaps, where one entity in a group of companies employs workers, and the workers perform work for another entity in that group of companies. In such circumstances, it is possible that the relevant entities would need to comply with the provisions of the legislation (including, in the case of the entity employing/supplying the workers, obtaining a licence).

In each State, it is expected that there will be further guidance as to the scope of the legislation.

The Queensland Regulations provide limited further guidance, although the certain individuals who are not considered to be “workers” are specified.[10]  In a recent consultation paper,[11] the Queensland Government has addressed the fact that some corporate entity employment arrangements may be captured by the scheme, when they are not intended to be captured. The Government has requested submissions on this issue and is canvassing ways to address this.

Similarly, the South Australian Regulations provide limited further guidance as to the scope of the legislation.[12] The South Australian Government has provided a “fact sheet” with examples of when a licence will be required in some given occupations, for example fruit pickers and accountants.[13]

Like the legislation in Queensland and South Australia, the Victorian Bill provides that Regulations may be handed down, which make available further detail as to the scope of the scheme.

When do the new provisions take effect?

In Queensland, the legislation commenced on 16 April 2018, and labour hire providers have a transition period of 60 days in which to lodge an application for a licence,[14] being by 15 June 2018.

In South Australia, the legislation commenced on 1 March 2018, and labour hire providers must apply for a licence within the transitional period of 6 months from the commencement of the legislation,[15] being by 1 September 2018.

The Victorian legislation is expected to be passed and commence in the coming weeks. The transition period in which labour hire providers may apply for a licence is 6 months from the commencement date of the legislation.[16]

Penalties and compliance

The maximum penalties for providing labour hire services without a licence are as follows:

  • Queensland: $130,439.10 or three years’ imprisonment for individuals and $378,450 for corporations.
  • South Australia: $140,000 or three years’ imprisonment for an individual or $400,000 for a body corporate.
  • Victoria (draft legislation): $126,856 for an individual and $507,424 for a body corporate.

The legislation in the respective States also contains penalties for breaches of various other obligations. The legislation will be enforced through the use of inspectors/authorised officers, who will monitor compliance and investigate contraventions.

Conclusion

Given the broad scope of the definition of labour hire provider, businesses should consider whether their staffing arrangements fall with the scope of the relevant legislation and, if so, take steps to ensure they comply.

It is important for labour hire providers and users of labour hire services to ensure that they are licensed, or utilising the services of licensed providers, respectively, to avoid contraventions and penalties under the legislation.

For users of labour hire services, this may include implementing processes to check that labour hire providers are licensed.