Knowledge


31 May 2018

Labour Hire Licensing – things you need to know

The Labour Hire Licensing Act (“Act”) and Regulations commenced on 16 April 2018.  Many businesses are still considering what that means for them.

The most pressing matter for businesses is that if you engage in the business of providing labour hire, you will need to acquire a licence by the specified date or face fines of up to $378,450.00.

What is labour hire?

In November, we highlighted that businesses should begin to prepare for the commencement of the Australia first regulations.  We also highlighted concerns we had with the legislation.  These concerns have been somewhat mitigated by the recently introduced Labour Hire Licensing Regulations.

Under the Act, “a person provides labour hire services if, in the course of carrying on a business, the person supplies, to another person, a worker to do work”.

This definition is broad.  The regulation helps to limit its scope by providing certain exceptions to what are, and are not, workers under the Act.  The following categories of workers are excluded from being labour hire:

  1. high income earners not covered by a modern award, enterprise agreement, or industrial instrument (high earner being prescribed by the Fair Work Act 2009, currently being an income of $142,000.00 or more);
  2. an executive officer of a corporation who is the only person supplied by the corporation;
  3. in-house employees on secondments or other similar temporary arrangements; and
  4. internal labour hire arrangements between related entities, such as a group of companies that carry on business collectively as one recognisable business.

Therefore, if you provide workers to another person, and the workers do not fit into one of the above exceptions, it is very likely you will need to acquire a licence.  In preparation for the launch of the legislation, the government has established a website with helpful information and examples of what are and are not labour hire services.  This can be found at www.labourhire.qld.gov.au.

Acquiring a licence

The deadline for acquiring a licence will change depending on whether you are an existing or new business.  New businesses will need to acquire a licence before they commence any operations as a labour hire provider.  Existing businesses have until 15 June 2018 to apply for a licence under the Act.

The process of acquiring a licence needs to be done online and can be done through the labourhire website.  Along with a number of requirements, you must pay a fee that is calculated by reference to the total wages paid in the preceding year:

Total wages paid/projected wagesApplication fee
Less than $1.5 million$1,000.00
$1.5 million to $5 million$3,000.00
More than $5 million$5,000.00

The “projected wages” figures are used where a labour hire business has not been operating in the financial year preceding an application.

For an existing business, while their application is being processed they may continue to operate.

Other requirements

In addition to the licensing requirements, the new legislation imposes a number of other obligations on labour hire providers.  A small selection of these are:

  1. the requirement to satisfy all relevant laws, including laws such as Fair Work Act 2009, Anti‑Discrimination Acts, and Work Health and Safety Act 2011;
  2. labour hire businesses must be financially viable, meaning they must be able to meet costs such as:
    • operating expenses;
    • workers can be paid promptly; and
    • being able to meet the costs of other obligations and expenses such as superannuation, taxation and WorkCover;
  1. the requirement to report to the chief executive every six months on matters such as:
    • number of services provided;
    • location of services provided;
    • if accommodation was provided, details of the accommodation;
    • type of services provided; and
    • any information regarding compliance with the relevant laws.

The reporting requirement is onerous.  It is intended to protect the labour hire workforce from exploitation, and is the main reason the legislation was introduced.

Conclusion

Under the Act, persons who engage labour hire from someone who is not licensed also face a fine.  It is important therefore, that all those involved in labour hire, both users and providers, review their current practices to ensure compliance.

Despite the extensive list of examples on the labour hire website, and the clarification provided by the Regulations, it is likely there will still be some confusion as to who is required to have a licence.

For more information about this issue please contact our partner, Tim McGrath on 07 4036 9700.

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