New Labour Hire Licensing requirements
Significant fines and further compliance burden for business
From 16 April 2018, the Labour Hire Licensing Act 2017 (Act) will come into effect in Queensland which establishes a licensing scheme to regulate the provision of labour hire services. Significant penalties apply where an unlicensed business provides labour hire services. These fines also apply to businesses who use unlicensed labour hire services. Importantly, for those with a license, a condition will be that the business is compliant with all relevant workplace laws including the Fair Work Act, awards and all other obligations. This non-compliance will put at risk a labour hire operations license in Queensland.
What is labour hire?
A person provides labour hire services if, in the course of carrying on a business, they supply a worker to another person to do work whether the worker is an employee of, or contractor to, the labour hire provider.
Who is a worker?
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 legislation is not intended to apply to traditional principal and subcontractor arrangements, genuine volunteer work, work experience placements arranged through an educational institution or recruitment services resulting in permanent placement. In the future, it is likely that regulations will be enacted to clarify the application of the Act and explicitly exclude certain types of arrangements.
However, there is a concern that the legislation may affect businesses who have internal labour structures where one entity employs all workers and supplies those workers to other companies within the structure. It is hoped that this will be clarified in regulations. It might even apply to secondee arrangements and other labour supply arrangements that would not usually be considered labour hire.
- Obtaining a license
In broad terms, the legislation requires providers of labour hire services to comply with a number of requirements to secure a license. Providers will need to complete an online license application (in a prescribed form, yet to be released) within 60 days of 16 April 2018 (so, by on or about 15 June 2018). To obtain a license, the business will need to establish matters including:
- information about whether the business is financially viable;
- information about whether each applicant has, and for the 5 years prior, complied with the Work Health and Safety Act 2011 (Qld) and the Workers Compensation and Rehabilitation Act 2003 (Qld), and is able to comply with those Acts;
- any other information reasonably required to decide whether each applicant and their nominated persons are “fit and proper persons” to provide labour hire services. This includes various questions including, amongst other things, about the person’s character (including, their honesty, integrity and professionalism); and
- other related information.
In determining whether an applicant is a “fit and proper person” to provide labour hire services, consideration will be given to whether they have a history of compliance with relevant laws, including workplace laws.
Licenses will be granted for a term of 1 year and may be subject to conditions such as the requirement to hold insurance, lodgment of security and be open to inspection of premises at regular intervals.
- Conditions and reporting
Various conditions will apply to licenses including that the business is compliant with all relevant workplace laws. This means that any non-compliance with, for example the Fair Work Act, the award system, discrimination or other legislation will put the labour hire license at risk.
License holders will have ongoing bi-annual reporting requirements from the date their license is granted.
- Labour hire register
A free online labour hire register will be established and will include details of all of the license information mentioned above. The register will provide a degree of transparency around the performance of license holders in relation to key aspects of the labour hire relationship, especially worker safety and incident and claims frequency.
The penalties for breaching these obligations
Businesses must not provide labour hire services unless they hold a license, or risk maximum penalties of:
- $130,439 or 3 years imprisonment – for an individual; or
- $378,450 – for a company.
Businesses must also not advertise, or in any way hold out, that they provide or are willing to provide labour hire services, unless they hold a license.
How do I prepare for these changes?
- Businesses who provide labour hire services in Queensland should review their operations now to ensure they will meet the criteria in the Act for a licence. This may include reviewing current workplace contracts policies and practice to ensure compliance with all aspects of workplace law. Urgent steps should be taken to remedy any compliance issues.
- 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.
- Businesses who have internal structures under which they supply labour to other entities within the group should watch out for regulations to clarify whether such arrangements must be licensed under the Act. As should other businesses with alternative labour arrangements, such as secondees.