Australia: Licence to hire: Labour Hire Licensing Bill 2017 - set to shake up the labour hire industry in Queensland

Last Updated: 14 July 2017
Article by Rachel Drew and Rose Sanderson

Most Read Contributor in Australia, November 2018

The Queensland Government is taking steps to prevent vulnerable workers from being exploited by labour hire operators by introducing a new Bill: the Labour Hire Licensing Bill 2017 (the Bill).

Labour hire issues

The Queensland Government has expressed concerns over the labour hire industry exploiting vulnerable workers. On 30 June 2016, the Queensland Finance and Administration Parliamentary Committee Inquiry reported on a variety of issues relating to the labour hire industry, including the underpayment of workers, limited unfair dismissal protection, and a lack of leave entitlements. The new Bill aims to prevent the exploitation of workers by introducing a labour hire licensing scheme imposing hefty penalties for non-compliance.

Key aspects of the Bill

The Bill aims to achieve its purpose by establishing a mandatory business licensing scheme for the labour hire industry in Queensland which will broadly require that:

  • labour hire providers are licenced
  • organisations who engage the services of a labour hire provider only use those business which are licenced.

In order to obtain a labour hire licence, an organisation must pass a fit and proper person test, which seeks to establish that the provider is capable of providing labour hire services in compliance with all relevant laws, and that their business is financially viable, with regular reporting requirements imposed on the licence holder.

A failure of a labour hire business to hold a licence or enter into arrangements with unlicensed labour hire provider will attract penalties: the maximum penalty for individuals is 1,034 penalty units ($126,044.60) or three years imprisonment, and for corporations, a penalty of 3,000 penalty units ($365,700). If a person advertises or hold outs that they provide or are willing to provide labour hire services unless they hold a valid licence they will be face a maximum penalty of 200 penalty units ($24,380).

Scope of the Bill

The Bill covers all labour hire providers operating in Queensland, regardless of where their registered address may be. The broad operation of the Bill captures organisations who arrange for work to be performed by labour hire workers in Queensland irrespective of whether the labour hire worker or company is based in Queensland. The Bill also intends to capture all types of labour hire arrangements of all descriptions, including group training activities and pyramid labour hire arrangements. The scope of the Bill covers labour hire providers who are engaged by clients to provide workers and those workers are sourced from another entity. In these circumstances, the entity who provides the labour will also need to be licenced under the Bill. The Bill does not cover genuine subcontracting, recruitment and workplace consulting arrangements.

The Bill sets out some examples of what a 'provider' is, such as a contractor who supplies workers to a farmer to pick produce or an employment agency that on-hires temporary administrative staff to a business.

What this means for employers

The Bill requires that the applicant labour hire providers, the nominated officer and the executive officer/s of the corporation pass a fit and proper person test, have a history of compliance with all relevant laws, be able to show that their company is financially viable, and the applicant must declare whether or not during the last five years they have been the subject of any disciplinary proceedings by a regulatory body under the relevant law.

The fit and proper person test requires that the Chief Executive examines the person's character, integrity, honesty and professionalism. The person must demonstrate an ability to comply with relevant laws, and show history of compliance with the relevant laws.

A person who was the holder of a licence and who had that licence cancelled cannot apply for a licence for two years after the cancellation. The Bill proposes that all licences be renewed annually with a fee payable for that renewal, according to the size of the business, based on a calculation of turnover and wages paid. It is aimed that the fee will be $1,000 for small business, $3,000 for medium sized business, and $5,000 for large operations. Under the Bill, inspectors are to be appointed, with the powers to investigate and prosecute suspected breaches of the Bill, search, enter and seize documents and materials. The fees are designed to maintain the enforcement and compliance activities that are the underpinnings of the proposed scheme.

There is also the requirement that licence holders report on their performance, which includes any breaches of workplace law. There will also be a public register of licenced providers – which will enable business to search the registers to make sure they are using the services of a genuine labour hire provider, and it will allow workers that intend to use a labour hire provider to obtain work to make sure that they are correctly licenced.

Labour hire providers or users must take steps now to ensure that they understand the impact of the Bill on their business and can meet the required standards for licensing. In addition, we recommend that affected organisations use contractual protections when engaging in labour hire activities to impose obligations on counterparties to comply with the Bill. Please contact us for further information on how to structure your labour hire dealings to protect your organisation against the hefty penalties proposed by the Bill.

For an overview that also covers a likely Victorian scheme, please click here.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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