The Labour Hire Licensing Act 2018 (Vic) (the Act) is set to commence operation on 29 April 2019. The new Victorian legislation is very similar to laws introduced in Queensland about 12 months ago.
Labour hire providers (eg. recruitment agencies supplying temporary staff) will have the benefit of a 6 month transition period to apply for a new licence in Victoria.
After 30 October 2019 it will be illegal to provide labour hire services in Victoria without a licence. Significant fines of over $500,000 (for a corporation) apply to both labour hire providers who operate without a licence and employers who use unlicensed providers.
The major changes introduced by the Act include;
- recruitment agencies (and others) providing temporary staff will be required to be licensed to operate in Victoria;
- any business that engages a labour hire provider to supply temporary staff must only engage a licensed provider;
- labour hire licensees will be required to satisfy a “fit and proper person” test to establish that they are capable of providing labour hire services in compliance with all relevant laws and that their labour hire business is financially viable;
- licensees must report regularly on their labour hire and associated activities; and
- strong penalties for breach of obligations.
When is a Licence Required?
Section 13 of the Act provides that a person must not provide “labour hire services” unless the person is the holder of a licence that is in force.
A person provides labour hire services if, in the course of conducting a business, the person supplies one or more individuals to another person (a host) to perform work in and as part of a business or undertaking of the host and the person supplied is paid by the labour hire provider.
As a result, most “temporary staff” recruitment agencies would be considered to be engaged in the provision of a labour hire services and would need to be licensed.
Fines for Non-Compliance
The Act provides that a corporation providing labour hire services without a licence is liable to a fine of up to $515,808.00. If a company were to advertise that it provides labour hire licensing services but was unlicensed, it would be liable to a maximum penalty of $128,952.00.
Large fines also apply to a host corporation who engages an unlicensed provider to supply them with labour hire services. However, this offence provision (section 15) does state that the offence will only be committed if the conduct is “without reasonable excuse”.
A further defence is available to a “host” if the labour hire provider was listed on the register of licensed providers “at the time the arrangement was entered into”. Accordingly, if a business engages an agency to supply some temporary staff and that agency is listed on the register of licensed providers when the staff were first supplied, then, even if that agency subsequently becomes unlicensed during the term of the placement, the business would still have a defence. This should make compliance somewhat easier for businesses utilising temporary staff in that they need only check the register once, at the outset of the arrangement.
However, businesses who utilise a large number of temporary staff using multiple agencies will need to begin compliance planning now to avoid potential penalties down the track.
Licence Application – Fit and Proper Person Test
The Labour Hire Authority will examine whether each “relevant person” associated with a labour hire licence applicant is a “fit and proper person”.
If the applicant is a company, each “officer” of the corporation will have to pass the test.
If a person has a criminal history, has personally been insolvent, has breached a workplace law or was an officer of a corporation which became insolvent, they may fail the test and be “ruled out”.
Applicants will also need to declare that they comply with; taxation laws, superannuation law, migration law and workplace laws generally. If they are a new business, they will need to satisfy the Authority they have a plan in place to comply with these laws.
Once licensed, a labour hire provider will be listed on a publicly available register
There is a “sliding scale” of licence fees payable depending on the turnover of the applicant.
If the business has an annual turnover of less than $2,000,000 per annum (a tier one business) then the application fee for a licence will be $1,560.60 and the annual licence fee will be $1,083.75. As an applicant’s turnover increases (tier 2 and 3 businesses) so do the fees payable.
The definition of “annual turnover” in the Regulations makes no distinction between the place where the income is earned. Accordingly, an agency business that generates most of its income in other States may still need to pay a high licence fee in Victoria (even if its income generated in that State is quite small). Labour hire providers may need to give this some consideration.
A labour hire licence can be granted for a period of up to 3 years (although there is an annual fee payable to keep the licence in force).
The Act establishes a similar compliance and enforcement regime as is established under the Queensland legislation. A new regulator (The Labour Hire Authority) is established with powers to;
- enter and search premises;
- examine and seize anything suspected of being connected with a possible contravention;
- inspect, copy or take extracts from documents on the premises and make images or recordings;
- seek the assistance of other persons; or
- where necessary apply to the Magistrates’ Court for a search warrant.
The new laws seek to “restore integrity to the labour hire industry by imposing regulations to protect vulnerable workers”.
The laws represent a political and ideological battle ground. The State Labor governments in Queensland and Victoria have introduced similar regimes. After the Liberal government was elected in South Australia, it repealed similar laws that had been set to commence in that State.
Will a change of government at the Federal level alter the landscape further? The Federal ALP has announced an intention to introduce a national labour hire licensing scheme if elected.