Last year, the Victorian Government introduced labour hire licensing laws to regulate the operation and use of labour hire services.
Who is a labour hire provider?
A “labour hire provider” is a business that has an arrangement with one or more individuals under which the business supplies the individuals to perform work in and as part of a host’s business or undertaking and the provider is obliged to pay the individual for performance of the work.
A labour hire provider also includes a business that provides certain recruitment and placement services, as well as contractor management services.
The definition of labour hire provider has been intentionally drafted broadly, which means there may be other engagement models that are captured by this legislation, even though they may not be considered labour hire relationships in the traditional sense (e.g. subcontracting arrangements).
While some exemptions apply (to certain secondees or students) businesses should consider whether they may be considered a “labour hire provider” or, if the business is a host, whether they engage with a labour hire provider.
How to obtain a licence?
Once the labour hire licensing scheme commences on 29 April 2019, labour hire providers will have six months, or until 29 October 2019 to register online and apply for a licence.
If labour hire providers do not apply for a licence within the six-month transition period they will be prohibited from providing labour hire services from 30 October 2019.
Unlicensed labour hire providers can face serious fines, exceeding $500,000 for companies and $100,000 for individuals.
Hosts who enter into an arrangement after 29 October 2019 with an unlicensed labour hire provider face the same penalties as those for operating unlicensed.
What are the requirements?
Any labour hire providers applying for a licence will be subject to a fit and proper person test, which will take such elements into account as past offences, cancelled or suspended licences and histories of insolvent trading.
What are the licence costs?
For this financial year, the licensing fees will be between $1,560 to $7,687, depending on the annual turnover of the applicant/licensee. If the application is successful, an annual fee will also be payable.
These fees will likely increase from 1 July 2019 as they are indexed for inflation. Labour hire providers may consider applying for a licence prior to the end of this financial year to avoid increased fees.
What about other states and territories?
Labour hire licensing legislation is already in place in Queensland. While South Australian labour hire licensing laws were introduced, they are to be repealed due to change in government and scrutiny about the legislation.
There are no developments on labour hire licensing schemes at a Federal level or in other states/territories. However, upcoming Federal election may see further changes and the ACT government has indicated it will consider implemented a scheme in the future.
What do you need to do?
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.