Australia: Time is running out for labour hire providers to apply for a licence – Victorian Labour Hire Authority to manage new licensing regime

Last Updated: 1 August 2019
Article by Michael Bishop and Ben Drysdale

Following the introduction of the Labour Hire Licensing Act 2018 ("Act") providers and hosts in the Victorian labour hire industry will be subjected to greater scrutiny and regulation, beginning with the requirement to obtain a licence on or before 29 October 2019. Under the threat of heavy penalties, from 30 October 2019, all labour hire providers must operate with a licence and all users of labour hire services must only work with licensed providers.

What is the purpose of the new labour licensing regime?

The labour hire licensing regime aims to address concerns about the exploitation of vulnerable workers by labour hire contractors, through the creation of barriers to entry into the labour hire industry.

The regime will ensure that all labour hire providers meet necessary standards in their compliance with workplace, superannuation, tax, safety and migration laws.

The Act specifically prohibits:

  • the provision of labour hire services without a labour hire licence
  • hosts from entering into an arrangement with an unlicensed labour hire provider
  • unlicensed providers from advertising or holding themselves out to be providers of labour hire
  • a person from entering into an arrangement for the supply of workers that they know, or have reasonable grounds to suspect, is designed to circumvent or avoid obligations under the Act

Do the new labour hire licensing laws apply to me?

The definition of a labour hire provider under the Act is narrower than its counterpart in Queensland's legislation, with a greater focus on arrangements that are generally recognised as the provision of labour by a provider to a host business.

Several categories of businesses will require a labour hire licence pursuant to the Act:

  1. General labour hire services

One business ("provider") supplies individuals to perform work in and as part of a host's business and the provider is obliged to pay the individual for performance of that work.

  1. Extended definition relating to recruitment/placement

The provider recruits or places one or more individuals with a host to perform work in and as part of the host's business and the provider both procures accommodation and pays wages to those individuals.

  1. Extended definition relating to contractor management

The provider places one or more individuals as independent contractors to perform work in and as part of a host's business and the provider manages the performance of the contractors.

  1. Deemed labour hire services

Individuals are deemed to perform work in or as part of a labour hire business if they work in the commercial cleaning, horticultural, and meat/poultry processing industries.

What will labour hire licensing fees cost me?

A non-refundable application fee is payable by providers seeking a licence. Once an application has been approved, there are ongoing licence fees payable. The table below sets out the fees payable by providers:

Application fee Annual fee Renewal application fee
Tier 1 business (annual
turnover
of no more than $2,000,000)
$1,599.48 1,110.75 1,599.48
Tier 2 business (annual
turnover
of between $2,000,001 and $10,000,000)
4,265.28 2,962.00 4,265.28
Tier 3 business (annual
turnover
of more than $10,000,000)
7,878.92 5,450.08 7,878.92

Annual turnover is defined in the Labour Hire Licensing Regulations 2018 ("Regulations") as the total ordinary income that is derived in the course of running a business.

Neither the Act nor the Regulations provide any concessions for businesses in which a labour hire component is only a portion of total turnover. Such businesses will pay a labour hire licensing fee based on the totality of their turnover.

Conclusion

Labour hire providers must submit their applications for a labour hire licence as soon as possible to avoid missing the 29 October deadline. Host businesses should proceed with caution following this date and complete their diligence before entering into arrangements with labour hire providers.

Pointon Partners have a broad range of employment law experience and can assist with preparing applications and advising providers and hosts about the new regime.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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