New labour hire licensing requirements – Contractors and corporate structures beware!
What is the QLD labour hire licensing scheme?
Since 15 June 2018, businesses required to obtain a license under the Labour Hire Licensing Act 2017 (Act) who have not obtained a license have been at risk of penalties up to $130,439 or 3 years imprisonment – for an individual or $378,450 – for a company. So too are businesses that make use of unlicensed labour.
Who is required to be licensed?
More businesses than you think. The Act requires persons to be licensed (Provider) if, in the course of carrying on a business, they supply a worker to another person to do work. In this case, they provide ‘labour hire’ services. This is a broad definition that can apply in a range of circumstances.
A ‘worker’ is a person who enters into an arrangement with a labour hire provider, under which the provider:
- May supply the person to another person to do work; and
- Is obliged, in whole or part, to pay the worker for the work.
The Labour Hire Licensing Regulations 2018 (QLD) (Regulations) were keenly awaited, and surprisingly did not (to the extent expected) narrow the broad application of the regime that appears to reach across workplace and corporate structures not traditionally thought to be “labour hire”.
The Regulations have left many arrangements unclear, and left many unsuspecting businesses exposed to fines who are not aware that they must be licensed.
Which workers are excluded from the licensing regime?
The Regulations specifically exclude the following persons from being ‘workers’ and from the requirement for their ‘Provider’ to be licensed:
- Highly paid employees (that earn at least the amount of the high income threshold under the Fair Work Act 2009 (cth) which is currently $145,400 and who are not covered by an award);
- Where the provider is a company, an executive officer of the company where they are the only person supplied to work at another entity (such as sole director/sole worker companies);
- Employees that are supplied temporarily as in-house employees(which is defined in the regulations); and
- Individuals supplied to a related company where those companies ‘carry on business collectively as 1 recognisable business’. There are some other exception in the act.
Company structuring affected
It was expected by many that employees working for other entities within the same group of companies would be excluded from coverage by the Act, and not be required to be licensed. However, the regulations make clear that the ‘group company’ exception only applies where the companies carry on one recognisable business. So, groups that within it have multiple recognizable businesses, and have employees that are supplied by one company to another operating a different business, may be covered. This means companies within one group may need a labour hire license to provide workers to another entity within the same group unless the workers supplied can be said to be an in house employee supplied on a temporary basis.
The need to be licensed (and the disclosure, and other related consequences) should be taken into account in group company structuring where the group operates more than one ‘recognisable business’.
Small contractors affected
The exception for an executive officer of the company where they are the only person supplied to another business, will apply to a narrow group of ‘independent’ contractors. However, companies who supply more than one worker – even ‘husband and wife’ contractors may well be caught by the licensing requirements. Consider a couple who operate a company that contract to a management rights business to provide caretaking and letting services. They could be covered by the scheme and be required to be licensed in certain circumstances.
The lack of detail in the Regulations and lack of cases to yet consider the Regulations mean that the application of the Act is often unclear.
What should businesses do?
- All businesses and individuals should consider whether they provide ‘labour hire’ or use labour hire within the meaning of the Act, and the Regulations, and determine whether it will apply to them. They should carefully consider the various contracting arrangements they have in place or make use of, and also consider any existing corporate structures in place and whether any workers from one business are provided to another business within the group.
- Businesses who consider they may provide labour hire services in Queensland should urgently seek legal advice about whether they are required to be licensed.
- Businesses in Queensland that use labour hire workers should contemplate creating management protocols to guard themselves from prosecution under the new laws. This may include seeking assurances in contractual arrangements that businesses you engage are licensed, seeking copies of licenses annually and conducting searches of the licence register.
This regime will affect a large amount of businesses who will be unaware of these new obligations and the penalties attached. Just because you don’t think you use traditional labour hire, doesn’t mean that you won’t fall under the definition provided in the Act. Even businesses which share employees across entities could be required to obtain a license for labour hire.
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice. It should not be relied upon and specific legal advice always be sought before taking any action.
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