Victoria’s new Labour Hire Licensing Scheme

Posted by on Oct 8, 2019

The new Victorian Labour Hire Licensing Scheme (Scheme) – designed to provide protection to vulnerable labour hire workers – came into force on 29 April 2019. The labour hire industry in Victoria is now regulated by the Labour Hire Licensing Authority, which is responsible for implementing the Labour Hire Licensing Act 2018 (Vic) (Act) and Labour Hire Licensing Regulations 2018 (Vic) (Regulations). The Act grants powers to inspectors of the Labour Hire Licensing Authority to
enter and search premises with or without consent, make enquiries and issue notices.

The Scheme requires labour hire providers to have a labour hire licence to lawfully operate in Victoria. Providers have been given six months – ending 29 October 2019 – to apply for a labour hire licence online. From 30 October 2019, providers operating without a licence, and host organisations who use unlicensed providers, face significant penalties (a maximum penalty of up to $528,704 for corporations and $132,176 for natural persons).

Although Queensland and South Australia are the only other states to have similar labour hire licensing schemes, labour hire providers and hosts should note that the Victorian Act can apply to interstate business arrangements that have been made in Victoria and – by extension – to work performed outside the state.

Uncertain as to who is a labour hire provider and who is a host? Labour hire providers do one or more of the following:

  • supply individual(s) to perform work in and as part of a host organisation’s business or undertaking and are obliged to pay the individuals for the work performed
  • recruit and/or place individual(s) with a host organisation to perform work in and as part of a hosts organisation’s business or undertaking and procure or provide accommodation for the individual(s) for some or all of the time they work with the host
  • recruit individual(s) as independent contractors to perform work in and as part of a host’s business and manage the contract performance of the independent contractors.

Labour hire hosts include businesses, farms or other organisations that use the services of labour hire providers to obtain labour for their enterprise. The Scheme requires that hosts only use licensed labour hire providers for the provision of labour. For this reason, hosts are encouraged to review the public register of licensed providers prior to confirming an engagement.

In some circumstances, if a business supplies workers in particular industries or establishments it will by default be considered to be a labour hire arrangement. In broad terms, the Regulations identify these activities, or work performed in these establishments, as labour hire services that require a licence:

  • cleaning of commercial premises
  • performing certain activities in the horticultural industry
  • performing certain activities in a meat manufacturing or processing establishment

There are also some circumstances in which an individual is not considered to be a worker under the Act, such that no licence is required to supply workers in that category. For example, individuals who are secondees are not considered workers under the Act, unless the provider of the secondee is predominantly in the business of providing the services of workers to other persons. An example of a secondment agreement would be an employer providing an employee to a client to assist with a particular project in circumstances where the provision of employees to assist clients is not the employer’s main business. As the employee performs work for the employer’s client on a fixed term agreement, the employee would be a secondee and the employer would not require a licence under the Act.

Similarly, a licence is not required to provide a worker in circumstances where the host and provider are part of an entity or group of entities that carry on a collective business. However, there is an exception where the entity is in the business of providing the services of workers to others who are not in the group (i.e. recruiting workers to perform work for an external host).

There are other exempt classes of workers including directors of small
body corporates, public sector employees and students on work experience or practical placement arrangements.

Now that the Scheme is well under way in Victoria, host businesses should ensure that if they engage the services of a labour hire provider, they are provided with evidence of the provider’s labour hire licence or their exemption. Penalties for using unlicensed providers or providing services without a licence are significant, so if your business is engaged in providing, or accepting labour hire arrangements, it will be important to ensure that you are operating in compliance with the Scheme.

Julia Eastoe is a Lawyer at Justitia. To view Julia’s profile, click here.