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Australia: New licensing arrangements for labour-hire providers

On April 29, 2019, the Labour Hire Licensing Act 2018 (“the Act”) came into effect. From this date onwards, labour-hire providers will have a six-month transition period to apply for a licence under the Act’s Labour Hire Licensing Scheme (“Scheme”).

From October 30, 2019 onwards, substantial penalties will apply to labour hire providers who do not have a licence or a licence application pending and to businesses that use unlicensed providers.

Host employers that use unlicensed providers will face fines of up to $500,000.

The Scheme was introduced following the Victorian Inquiry into the Labour Hire Industry and Insecure Work (“Inquiry”) in 2016. The Inquiry found there was a problem with “rogue” labour hire operators in Victoria, particularly evident in the horticultural industry, and the meat and cleaning industries, which had led to the exploitation of vulnerable workers.

The Inquiry recommended that Victoria introduce its own labour hire licensing scheme, the most common reform proposal put forward by stakeholders, and in doing so lead the way for the national adoption of a labour hire licensing scheme.

In the announcement for the Scheme on February 28, 2019, the Minister for Industrial Relations, Tim Pallas, said the scheme would bring a new level of integrity and scrutiny to the labour hire sector and ensure vulnerable workers are kept safe from exploitation and being underpaid.

To obtain a licence, providers will be required to pass a “fit and proper person test.” For the purposes of the Act, a “fit and proper person” will be a person who has not:

  • within the past 10 years, been found guilty of an indictable offence; and
  • within the past 5 years, been found by a court, tribunal or regulator to have contravened a workplace law, a labour hire industry law or a minimum accommodation standard.

Furthermore, the Act requires that a “fit and proper person”, either personally or an officer of body corporate, will not be a person who within the past 5 years has:

  • had a licence under a labour hire industry law cancelled, suspended or revoked;
  • been insolvent or was an externally administered company under the Corporations Act 2001 (Cth) (“Corporations Act”);
  • been an officer of another body corporate whose licence was cancelled, other that at the initiative of the holder of the licence; or
  • been disqualified from managing corporations within the meaning of Part 2D.6 of the Corporations Act.

Under the Act, labour hire providers seeking to apply for or renew a licence will also need to show, by way of a declaration, compliance with workplace laws, labour hire laws and minimum accommodation standards, as well as report annually on their activities.

The Labour Hire Licensing Authority was also established by the Act to oversee the licensing system, to regulate the provision of labour hire services, to ensure all Victorian labour hire providers are licensed and that users of labour hire only use licensed providers.