Under new legislation introduced earlier this year, labour hire companies in South Australia and Queensland are now required to be licensed, and employers that engage labour hire companies are obliged to ensure that the company is a licensed labour hire service provider.
These new licensing schemes have been designed to regulate the provision of labour hire services and protect employees from exploitation by labour hire service providers.
Importantly, businesses that supply their clients with workers from time to time may be caught by the obligations of these licensing schemes, even if they don't think they are actually engaging in labour hire practices.
New Labour Hire Licensing Scheme in Queensland
The legislation for the labour hire licensing scheme in Queensland commenced on 16 April 2018.1 Existing labour hire providers must lodge an application for a licence before 15 June 2018 to be compliant with the new scheme.
A labour hire service provider is one that, in the course of its ordinary business, supplies workers to another person to do work. Under the new legislation, the only persons authorised to provide labour hire services are licensed labour hire service providers.
In the Queensland scheme, certain persons or classes of persons may not be considered "workers" for the purposes of the scheme. For example, high income threshold employees2 are not considered "workers" under the Queensland Act.
To obtain a licence to become a labour hire service provider in Queensland, businesses must demonstrate that they are fit and proper to provide labour hire services, that their business is financially viable, and that they are able to comply with the relevant laws. The cost of a licence depends upon the total amount of wages or salaries paid during the last financial year and ranges from $1,000 for businesses that paid less than $1.5 million in wages for the last financial year to $5,000 for businesses that paid over $5 million in wages for that same period.
Various penalties apply for non-compliance with the licensing scheme. The maximum penalty for providing or engaging in unlicensed labour hire services in Queensland exceeds $370,000. Failing to adhere to reporting obligations or creating agreements that attempt to circumvent the obligations under the scheme could also attract fines of between $10,000 and $25,000.
New Labour Hire Licensing Scheme in South Australia
The new labour hire licence legislation in South Australia commenced on 1 March 2018 and requires all providers to lodge an application for a licence before 31 August 2018 to be compliant with the new scheme.3
Similarly to Queensland, only licensed providers are authorised to provide labour hire services in South Australia. The definitions of a provider and a worker under the South Australian Act are almost identical to the Queensland legislation. However, unlike Queensland, the legislation in South Australia does not exclude any person or classes of persons from the definition of a "worker" in labour hire arrangements. This means that workers who are deemed not to be workers in labour hire services in Queensland may still be considered workers under the South Australian legislation.
To obtain a licence in South Australia, businesses must show that they are fit and proper to be the holder of the licence, and have sufficient financial resources for the purpose of properly carrying on the business under the licence. In addition to the application fee, businesses must pay an annual fee of $1,200.
In South Australia, the maximum penalty for a business providing or engaging in unlicensed labour hire services is $400,000. Penalties may also apply where businesses attempt to enter into arrangements designed to circumvent the obligations under the South Australian Act or they provide officials with false or misleading information about their contracting arrangements.
Key learnings for labour hire service providers
Labour hire service providers in Queensland and South Australia are now required to have a licence to provide labour hire services to avoid costly penalties. Businesses that engage labour hire service providers must also ensure that those providers are licensed.
Uncertainty may arise in circumstances where businesses provide individuals to work for their clients from time to time as part of their normal services which may be caught by the provisions of the labour hire licensing schemes. In such situations, it may be worthwhile to apply for a licence "just in case", to ensure that the business is covered and can avoid any risk of non-compliance and penalties.
1 The Labour Hire Licensing Act 2017 (Qld) and the Labour Hire Licensing Regulation 2018 (Qld).
2 The high income threshold under the Fair Work Act 2009 (Cth) is currently $142,000.
3 The Labour Hire Licensing Act 2017 (SA) and the Labour Hire Licensing Regulations 2018 (SA).
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