Australia: Labour hire licensing laws in Victoria and South Australia

IN BRIEF - TO WHAT EXTENT WILL REGULATIONS LIMIT BROAD DEFINITION OF LABOUR HIRE RELATIONSHIPS?

The South Australian and Victorian Parliaments have recently introduced labour hire licensing scheme legislation similar to that introduced in Queensland earlier this year. While the regulations in each state are yet to be finalised, it is clear that these Acts define labour hire arrangements very broadly and introduce stringent obligations on behalf of those entities that provide workers to clients' workplaces.

STATE AND FEDERAL INQUIRIES INTO LABOUR HIRE ARRANGEMENTS HAVE BEEN IMPETUS FOR LEGISLATION

The introduction of these frameworks has the potential to reverse the recently growing trend of professionalisation of employment providers, as traditional employers seek to minimise some of the risks associated with employment in Australia by outsourcing a portion of their responsibilities to expert employers.

We first reported the likelihood of additional labour hire licensing schemes when we analysed the Queensland Labour Hire Licensing Act earlier in 2017. In late November, South Australia passed the first stage of its labour hire laws and now in mid-December, Victoria's Parliament is also finalising similar legislation.

The Acts are for the most part similar, although each jurisdiction has certain variations and peculiarities drafted to suit its own parliament's favour. We intend to analyse the various Acts in detail once each state assents to its legislation and finalises the wording of the supporting regulations.

Broadly speaking, the labour hire schemes are the result of various state and federal level inquiries and reports into the increasing prevalence of labour hire arrangements and the potential for such arrangements to effectively reduce workers' entitlements. The reports, such as the Victorian Inquiry into the Labour Hire Industry and Insecure Work and the federal Inquiry into independent contracting and labour hire arrangements, have universally called for greater regulation of the professional employment industry to protect workers' rights.

The new Acts will, for example, require labour hire providers to pay licensing fees, pass fit and proper person tests and demonstrate compliance with workplace laws and employee entitlements.

BUSINESSES IN SOUTH AUSTRALIA AND VICTORIA THAT OPERATE OR USE LABOUR HIRE PROVIDERS SHOULD CONSIDER IMPACT OF NEW LEGISLATION

Of greater concern for most employers are the exceptionally broad definitions the Acts variously use for labour hire relationships. The definitions tend to be so broad that they will clearly encompass working relationships that were previously never considered to be labour hire arrangements, such as the secondment type arrangements used by many law firms and their clients to increase practical engagement and experience.

As such, employers are now left awaiting each jurisdiction to finalise its regulations which it is expected will limit the scope of the Acts.

Businesses that operate or use professional employment providers should begin or continue their consideration and analysis of the Act's impact in their jurisdiction. Other employers should wait to see exactly how significantly each state's regulations will limit the definitions of labour hire providers, before determining if any action is necessary.

We will continue to provide you with updates and will provide a more detailed analysis once the regulations are finalised in each jurisdiction.

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.