23 May 2019
In 2015, the Victorian Government commissioned an inquiry into the labour hire industry in Victoria. The inquiry was asked to investigate the practices of labour hire providers (agencies) with a focus on sham contracting, insecure work and the abuse of visas that avoid workplace protections and undermine the national minimum employment standards.
Professor Anthony Forsyth of the RMIT University School of Business and Law conducted the inquiry, ultimately recommending that Victoria establish a licensing scheme to regulate labour hire agencies.
The Victorian Government accepted the recommendations and passed the Labour Hire Licensing Act 2018 (Vic) (the Act) on 20 June 2018. The Act establishes a licensing system to regulate the provision of labour hire services.
Who does the Act cover?
The Act imposes obligations not only on the agencies that provide labour hire services, but also on the users of the services (hosts), if they procure labour hire services from an unlicensed business.
The threshold requirement for a business to be licensed is that it will ‘provide labour hire services’ pursuant to section 7(1) of the Act. This requires that:
The Act primarily covers engagement arrangements which are generally understood to be "labour hire" or "on hire" arrangements. It applies to engagement arrangements such as subcontracting arrangements or where an individual or individuals are supplied to perform work in and as part of the host’s business or where a person supplies a worker to a host's business in exchange for payment.
Factors that suggest an individual is working in and as part of the host’s business are:
It is clear that the Act will apply to conventional labour hire providers and will require them to obtain a licence. However, businesses that frequently perform work at the premises of their clients should carefully assess the criteria to ensure compliance.
It is important to note that the Labour Hire Licensing Regulations 2018 (Vic) (the Regulations) go further and deem several industries that the Victorian Government has identified as requiring the protections that are afforded by the Act. These are:
Businesses that provide the above services will be considered agencies and required to apply for a licence by 30 October 2019.
Labour hire service agencies - application
Agencies that fall within the Act or the Regulations are required to apply for a licence by 30 October 2019. Agencies need to obtain and disclose the following information in their application:
Agencies must also meet the ‘fit and proper person’ requirement of the application.
Unlicensed agencies may be liable for penalties up to $126,856 for natural persons, or $508,424 for body corporates. Interestingly, hosts entering into arrangements with an unlicensed agency could be liable for the same.
Penalties can also be imposed on business that advertise, hold out, or are willing to provide labour hire services without a licence.
Post script: the newly-elected Coalition government proposed as part of its election policy to develop a national labour hire registration scheme for the four “high risk” industries of horticulture, meat processing, cleaning and security.
Author: Ashleigh Warren
Charles Power, Partner
T: +61 3 9321 9942
Michael Selinger, Partner
T: +61 2 8083 0430
Rachel Drew, Partner
T: +61 7 3135 0617
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.