Under legislation introduced in 2018, labour hire companies in South Australia and Queensland must be licensed and employers that engage labour hire companies must ensure that those companies are licensed labour hire service providers.
The new licensing schemes aim to regulate the provision of labour hire services and protect employees from exploitation by labour hire service providers.
Businesses that occasionally supply clients with workers may be subject to these schemes, even if they do not think that they are engaging in labour hire practices.
The legislation for the labour hire licensing scheme in Queensland commenced on April 16 2018.(1) Existing labour hire providers must apply for a licence before June 15 2018 in order to be compliant with the new scheme.
A 'labour hire service provider' is a company that, in the course of its ordinary business, supplies workers to another party to do work. Under the new legislation, the only parties authorised to provide labour hire services are licensed labour hire service providers.
In Queensland, certain persons or classes of persons may not be considered workers for the purposes of the scheme. For example, high income threshold employees(2) are not considered to be workers under the Queensland Labour Hire Licensing Act.
To obtain a licence to become a labour hire service provider in Queensland, businesses must demonstrate that they:
- are fit and proper to provide labour hire services;
- are financially viable; and
- can comply with the relevant laws.
The cost of a licence depends on the total amount of wages or salaries paid during the last financial year and ranges from A$1,000 for businesses that paid less than A$1.5 million in wages for the last financial year to A$5,000 for businesses that paid over A$5 million in wages for the same period.
Various penalties apply for non-compliance with the licensing scheme. The maximum penalty for providing or engaging in unlicensed labour hire services in Queensland exceeds A$370,000. Failing to adhere to reporting obligations or creating agreements that attempt to circumvent the obligations under the scheme could also attract fines of between A$10,000 and A$25,000.
The new labour hire licence legislation in South Australia commenced on March 1 2018 and requires all providers to apply for a licence before August 31 2018 in order to be compliant with the new scheme.(3)
Similar to Queensland, only licensed providers are authorised to provide labour hire services in South Australia. The definitions of a 'provider' and a 'worker' under the South Australia Labour Hire Licensing Act are almost identical to those under the Queensland legislation. However, unlike Queensland, the South Australia legislation does not exclude any person or classes of persons from the definition of a worker in labour hire arrangements. As such, workers who are deemed not to be workers in labour hire services in Queensland may still be considered workers under the South Australia legislation.
To obtain a licence in South Australia, businesses must show that they:
- are fit and proper to be a licence holder; and
- have sufficient financial resources to carry on the business properly under the licence.
In addition to the application fee, businesses must pay an annual fee of A$1,200.
In South Australia, the maximum penalty for a business providing or engaging in unlicensed labour hire services is A$400,000. Penalties may also apply where businesses:
- attempt to enter into arrangements designed to circumvent the obligations under the South Australian act; or
- provide officials with false or misleading information about their contracting arrangements.
Labour hire service providers in Queensland and South Australia must be licensed to provide labour hire services in order to avoid costly penalties. Businesses that engage labour hire service providers must also ensure that those providers are licensed.
Uncertainty may arise in circumstances where businesses occasionally provide individuals to work for their clients as part of their normal services, which may be subject to the labour hire licensing schemes. In such situations, it may be worthwhile to apply for a licence just in case, to ensure that the business is covered and avoid the risk of non-compliance and penalties.
For further information on this topic please contact Julian Riekert at Lander & Rogers by telephone (+61 3 9269 9000) or email (email@example.com). The Lander & Rogers website can be accessed at www.landers.com.au.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.