Labour hire operators across Australia, and those who engage labour hire, should prepare to operate within labour hire licencing schemes.

Following parliamentary inquiries in Queensland, Victoria, South Australia and the Federal Senate which heard testimony of the vulnerability of on-hired workers, it appears state-based labour hire licensing schemes will soon be a reality, with Queensland and Victoria the likely first adopters.

The Queensland scheme – a broad approach

In May 2017, the Queensland government introduced the Labour Hire Licensing Bill 2017 to the parliament. The Bill would establish a state-wide licencing scheme that requires providers of labour hire services to obtain a license in order to operate legally and will also prohibit any person that engages labour hire firms from engaging an unlicensed provider.

To obtain a licence the provider will need to pass a ‘fit and proper person’ test which involves an examination of the responsible person’s character, history of compliance or ability to comply with relevant law, their history of convictions (if any) whether the person has been insolvent, whether the company has been placed into administration, receivership or liquidation while the person was an executive officer of the corporation, whether the person has been disqualified from managing corporations and whether the person is under the control of, or substantially influenced by, another person whom the chief executive considers is not a fit and proper person to provide labour hire services.

All labour hire providers will be required to report regularly about their operations by providing, among other things, details of the number of workers they have on-hired, the arrangements between the provider and the on-hired workers, the industry, location and type of work carried out, details of accommodation provided (if any) to the workers, disclosure of any disciplinary enforcement action taken against the service provider by a regulatory body under a relevant law during the reporting period, proof of ongoing work health and safety compliance and the number of applications for workers compensation made against the service provider.

For service providers and those who engage them there will be significant penalties for the most serious breaches of the legislation. For anyone caught operating as labour hire provider without a licence or any person found to have engaged an unlicensed service provider, a penalty of up to $126,044.60 and/or up to three years’ imprisonment may apply to an individual. For a corporation, as much as $365,700 may apply. The only defence to engaging an unlicensed provider will be that the provider’s name appeared on the register as a licence holder.

A likely Victorian scheme – a targeted approach

In August 2016, the Victorian Inquiry into the Labour Hire Industry and Insecure Work published its final Report following extensive community consultation and public hearings across the state. One of the 35 recommendations contained in the Report is that Victoria should introduce a licensing scheme for labour hire service providers in three industries: horticultural, meat and cleaning – being the industries with the highest degree of misuse of labour hire practices. The Report recommended that the scheme have capacity to expand or contract to other industries across time to address changes in the way labour hire is used in the economy.

In May this year the Andrews Government adopted 33 of the 35 recommendations, including the introduction of the licensing scheme which is also likely to involve a fit and proper person test for responsible individuals as well strong enforcement and penalty provisions.

Labour hire firms, and those who use them, should keep abreast of legislative developments and begin putting in place a compliance and monitoring strategy.