The Queensland Government recently passed the Labour Hire Licensing Act 2017 (Qld), which introduces a licensing system for labour hire providers throughout the State. The commencement date of the Act is yet to be determined.
Under the Act, any person providing ‘labour hire services’ (defined to mean supplying a worker to another person to do work) without a licence will have committed an offence and may be liable to pay substantial penalties. For example:
- Providing labour hire services without a licence will have a maximum penalty of up to $378,450.00 (for a corporation).
- Entering into a labour hire arrangement with an unlicensed labour hire provider will have a maximum penalty of up to $378,450.00 (for a corporation).
- Entering into an ‘avoidance arrangement’ will have a maximum penalty of up to $378,450.00 (for a corporation).
What are ‘labour hire services’?
‘Labour hire services’ is broadly defined, and includes, for example, contractors who supply workers to a farmer or fruit grower to pick produce. It could also capture an employer which seconds an employee to another business, and may be broad enough to cover service companies which employ a business’s staff outside of the trading entity.
A person will provide labour hire services regardless of whether:
- the worker is an employee of the provider;
- a contract exists between the worker and provider;
- the worker is supplied to another person directly or indirectly; and
- the work done is under the control of the provider.
The Government has said that Regulations will be introduced to limit the scope of the definition where the supply of a worker by the person is not a dominant purpose of the business, however we do not yet know the exact nature of the regulations which will be introduced.
Applying for a licence
A person seeking to provide labour hire services (‘the labour hire provider’) must make a licence application within 28 days from the date of commencement of the Act, and must pay the applicable licence fee. This fee will vary depending on the size of the labour hire provider.
Further, the labour hire provider must pass a ‘fit and proper person’ test, which will involve consideration of the following:
- history of compliance with relevant laws;
- financial viability;
- the person’s character, including honesty, integrity and professionalism (this also relates to directors of a company);
- previous licenses which have been suspended, cancelled or had conditions imposed;
- previous convictions of offences against relevant laws;
- past insolvency or whether a relevant corporation has been placed into administration, receivership or liquidation;
- whether a relevant person has been disqualified from managing a corporation under the Corporations Act;
- whether the applicant is under the control of, or substantial influence of, another person who is not a ‘fit and proper’ person.
Once a licence is issued licences have a maximum one year term, and must be renewed following expiration. Licences can be granted subject to conditions, and may be suspended or cancelled where, for example, the licensee:
- has contravened a condition of the licence;
- is no longer a fit and proper person;
- has contravened a relevant law; or
- has been wound up or deregistered, or an individual licensee has become bankrupt.
Once a licence is cancelled, the licensee may not apply for another licence for two years following cancelling (for individuals).
The licensee must comply with extensive reporting requirements. These include:
- reporting on the arrangements between the licensee and workers;
- the locations and accommodation of workers; and
- any disciplinary action or enforcement action taken against the licensee by the regulatory body.
Once a licence has been issued, the labour hire provider must allow inspectors access to their workplace for the purposes of monitoring compliance. Inspectors have broad powers which include the ability to search the premises, take equipment to the premises and remove things or documents from the premises.
Using a labour hire provider
A register of licensed labour hire providers will be maintained. It is a defence to a charge of entry into an arrangement with an unlicensed labour hire provider to show that the provider is listed on the register.
Accordingly, businesses engaging labour hire providers will need to ensure they search the register before finalising the labour hire agreement.
What this means for industry
The changes outlined above have created significant new regulatory hurdles for labour hire providers operating in Queensland, and the substantial penalties of non-compliance apply to any party involved in the unlicensed provision of labour.
Importantly, these changes may also act as a template for future regulation throughout the rest of the country.
If you believe your business (or service entity) might provide ‘labour hire services’, or if you want more information about using labour hire services, please contact our Commercial & Property team to discuss your obligations under the new legislation on (07) 4963 2000 or via our online contact form.