Following the Victorian Government’s inquiry into the labour hire industry and insecure work,
the state government passed the Labour Hire Licensing Act 2017. This new legislation
reflects similar laws recently passed in South Australia and Queensland regulating the
operation and use of labour hire services.
For businesses that meet the definition of ‘labour hire provider’, the new regime requires
providers to obtain a licence or face serious fines – in Victoria these exceed $500,000 for
companies and $100,000 for individuals. Any provider applying for a license will be subject
to a fit and proper person test, which will take such elements into account as past offences,
cancelled or suspended licenses and histories of insolvent trading.
It is also an offence under the new legislation to engage a labour hire provider who is
operating without a license. The penalties for engaging an unlicensed provider are the same
as those for operating unlicensed. If you regularly engage labour hire workers, you need to
ensure that your provider is aware of their obligations and holds a current license.
It is important to note that the definition of ‘labour hire provider’ in each of the State
legislation has been intentionally drafted to cast a broad net and cover with a wide range of
relationships beyond that of the traditional labour hire engagement. As a result, some
engagement models may be covered by the new laws where they would not have previously
been considered labour hire relationships in the traditional sense. Consequently, if there is
an arrangement for placing a worker with another company, even through an intermediary, it
may meet the definition of the provision of labour hire services and a license may be
required. Unfortunately, there are inconsistencies in the definitions in each piece of
legislation which will likely lead to uncertainty and complexity, particularly for businesses
operating nationally.
While the Queensland legislation is already in place, the South Australian legislation has
been slated for commencement in early 2019. At this stage the Victorian legislation will
commence on or before November 2019.
Businesses who engage in the supply, and/or placement of workers should seek advice as
to whether these arrangements are covered by the legislation, and if they are, take
appropriate steps to avoid exposure to substantial penalties.
