Using labour hirers? Vet your suppliers carefully


Using labour hirers? Vet your suppliers carefully

Employers in several states will soon need to check the credentials of their labour hire providers carefully or they could be up for large fines.


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Employers in a number of states will soon need to check the credentials of their labour hire providers carefully or they could be up for large fines.

If you are considering using labour hire providers in several States, you must ensure that the provider is licensed. If you use an unlicensed provider, your business could be up for substantial fines.

New legislation is about to commence in Queensland (on 16 April 2018) and South Australia (on 1 March 2018), and a similar Bill, the Labour Hire Licensing Bill 2017, is currently before Parliament in Victoria. There are signs that Western Australia and the ACT also are considering introducing similar laws, and the Federal and NSW Oppositions have indicated that they would also legislate if elected.

What the laws require

Specific provisions vary between the laws, but they have the following requirements in common:
  • All labour hire providers must hold a current licence, renewable annually.
  • An employer can only use labour hire providers who are licensed. A publicly-accessible register of licensed providers will be maintained.
  • To gain a licence, a provider must pass a “fit and proper person” test and demonstrate compliance with relevant employment and workplace health and safety laws.
  • Government authorities, eg a Labour Hire Licensing Authority, will monitor compliance with the law. Inspectors will have the power to enter workplaces to inspect documents and obtain information from employers.
  • Any arrangements entered into with the intention of avoiding any provisions of the laws are illegal.

Both parties can be penalised

It is important to note that both the labour hire provider AND the employer who contracts with it can be fined substantial amounts if the labour hire arrangement fails to comply (eg the provider is unlicensed). Both civil and criminal penalties may apply.

In some cases, there is an onus on employers to report any potential or actual avoidance arrangements to the relevant authority.

Scope of the laws is not clear

Some critics of the laws have claimed that their scope may go beyond what are normally regarded as labour hire arrangements. They have quoted examples such as the following:
  • Where an employee paid by one business performs work for another business (example: a nurse who visits other employers to give flu shots to employees)
  • Where subsidiary companies of the same organisation supply employees to each other.
These claims have yet to be legally tested.

What is clear, however, is that the laws apply across State boundaries. For example, if an employer in New South Wales used an unlicensed Queensland labour hire provider, or supplied labour hire workers to a Queensland business, the Queensland law would apply to it.

What you need to do

Businesses often seek labour hire workers at short notice, eg to deal with a short-term workload spike, so you need to be prepared. The following steps are recommended:
  • Ensure that any provider you are considering using is licensed. Either require it to provide evidence or check the official register. If in doubt, check with the relevant authority.
  • Keep records of the licence details of each provider you use.
  • For any arrangement that requires your employees to perform work for another employer, check whether the laws apply and whether you need to obtain a licence BEFORE proceeding.
This article was originally published on our sister site HR Advance. HRA and WorkplaceInfo are both owned by the NSW Business Chamber.

See also: What's on the IR radar for 2018?
Vic govt moves to protect labour hire workers
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