New labour hire laws and licencing requirements in Australia22 June 2018 | Employer's Liability
Legislation has recently been passed in Queensland and South Australia that will affect labour hire companies and businesses that use the services of labour hire companies.
This legislation will not only affect businesses based in these two States, but it will also impact businesses who engage workers through a labour company based in either Queensland or South Australia, together with businesses that engage labour hire workers to perform duties in either of these States.
Both pieces of legislation establish a licensing scheme requiring providers of labour hire services to apply for a licence.
Victoria has also introduced the Labour Hire Licensing Bill (Vic) before Parliament. Whilst it not yet enacted, it will likely receive royal assent in the near future.
Changes in Legislation
The Labour Hire Licensing Act 2017 (Qld) and Labour Hire Licensing Act 2017 (SA) establish a mandatory labour hire licensing scheme intended to protect labour hire employees.
Key features of the scheme include that:
- labour hire providers must obtain a license to operate, which must be renewed annually.
- persons who engage labour hire providers must only engage licensed providers
- labour hire providers must:
- satisfy a “fit and proper” test
- comply with all relevant laws
- report on their activities and operations every 6 months
- be financially viable and be able to meet other obligations (i.e. taxation and superannuation)
- pay an annual licence fee
- there are significant penalties for a breach of the obligations
Labour Hire Providers
Both pieces of legislation define “labour hire provider” differently, but relevantly specify that it is broadly defined to mean supplying a worker to another person to do the work.
The Queensland Act recently clarified that this definition excludes:
- genuine secondments
- workplace consulting
- high income workers (currently defined in the Fair Work Act 2009 as an employee earning $142,000 per annum and is not covered by a state award, modern award or an enterprise agreement);
- workers who are also the director, partner or owner of the business;
- in-house employees who are temporarily supplied to another; and
- employees working for an employing entity used wholly within a recognisable business.
Labour Hire Licence
While not yet specified in the South Australian legislation, the Queensland Act provides that the labour hire licence fee is determined by the wages paid by the business, which is as follows:
|Tier||Business||Licence Fee Cost|
Tier 1 business
Wages of less than $1.5M
Tier 2 business
Wages of more than $1.5M but less than $5M
Tier 3 business
Wages of $5M or more
If a labour hire provides fails to apply for or obtain a licence in order to carry on its business activities, it may be subject to significant penalties (which may include imprisonment).
The penalties in the relevant legislation include:
$12,615 to $130,439.10or three years imprisonment
$12,615 to $378.450
$2,500 to $140,000or three years imprisonment
$2,500 to $400,000
|Victoria||$6,334 to $12,696||
$25,339 to $506.784
Implications for Employers
Given the above, employers and labour hire service providers would be advised to familiarise themselves with these changes and take steps to ensure that they are compliant with the legislative changes.
The Queensland Act is currently in force. If you are a labour hire provider or engage labour hire providers in Queensland, we recommend that you take immediate steps to review your arrangements and ensure that you are not unlicensed or that you do not engage any unlicensed providers.
Additional information on the Queensland Act and scheme is available on the new Labour Hire Queensland website. It is also possible to make the licence application through this website.
Licensing requirements in South Australia will not be enforced before 1 February 2019. The South Australian website provides regular updates and if these impact your business, you should regularly review this website in order to ensure your compliance.