In brief - businesses may be penalised for supplying or engaging with a supplier of labour hire without a Labour Hire Agreement
The thought of your business receiving fines up to as high as $413,550, for something as simple as engaging a worker from another business, is a catastrophic nightmare for any business.
Yet, since the introduction of the Labour Hire Licensing Act 2017 (Qld) (Act), many businesses have been penalised for supplying or engaging a supplier of labour hire without a Labour Hire Licence.
The penalties have been delivered swiftly and forcefully.
In 2021, the Labour Hire Licencing Compliance Unit issued fines of almost quarter of a million dollars between, Better Crop Management Pty Ltd for using unlicenced labour hire providers to harvest crops ($195,000) and the unlicenced provider, who was fined $50,000.
Beyond Queensland, similar mandatory licencing schemes have been introduced in Victoria, South Australia and the ACT to provide greater protection to vulnerable workers. Meaning businesses need to be aware of their responsibilities under the Act, which serves as a timely reminder to review your labour hire and engagement practices to ensure compliance.
Compliance: The Law
The Act strictly prohibits parties from supplying labour hire services without a licence and further penalises parties who engage labour hire from an unlicenced provider.
A person or business will provide labour hire services if it supplies a worker, to another person or business, to perform work. The Act adopts a broad definition of worker (compared to other jurisdictions) which includes anyone who is supplied to engage in work by one party to another party.
This broad application means that, regardless of the industry you operate in, your business may need to ensure a licence is in place before supplying or receiving labour hire services, or else risk a penalty.
For businesses, it may also be important to consider that engaging in unlicenced labour hire may result in subsequent liability under contract law, as breaching the Act may result in a contract being void or unenforceable.
Not all arrangements require a licence, as some exceptions apply.
Exceptions under the Act
The Act expressly provides exceptions to allow certain persons to operate without a licence, they are:
- Employment Agent Exception where a person who is an a private employment agent, such as recruiters and personal sports and mode; agents, under the Private Employment Agents Act 2005; and
- Subcontractor Exception where a person who is a contractor that carries out construction work as defined by section 10 of Building and Construction Industry Payments Act 2004. This strictly applies to direct construction work, and rarely applies to related work that may be used in the construction process, like consulting or advisory services.
The Act further permits exceptions to be made under the Labour Hire Licensing Regulation 2018, which include:
- High income threshold exception - which applies to workers, who are employed, and their annual wages are equal to or more than the high-income threshold (currently $158,500 under the Fair Work Act 2009 (Cth)).This exception won't apply if the worker is a contractor and is no longer an employee.
- Secondment exception - allows for a business to provide its in-house employees to work on a temporary basis for clients on a secondment arrangement. This exception won't apply if the person is not an ongoing, in-house employee.
- Executive exception - allows for individuals to be supplied to a corporation as an executive officer of that corporation. This exception will only apply if the individual is the only individual the provider supplies.
- Connected entity exception - businesses that are connected or related entities, may supply a worker to do work for that related entity, provided the entities carry on wok as one or as a group of entities.
How to prevent penalty
To avoid penalty, businesses should ensure that if an exception does not apply to the way that they engage with labour, that they are licenced and do not:
- Advertise or state that they provide or are willing to provide labour hire services unless they hold a labour hire licence (Labour Hire Licensing Act 2017 (Qld) s 10(2)).
- Enter into an arrangement with a provider of labour hire services unless the provider holds a licence, without a reasonable excuse (Labour Hire Licensing Act 2017 (Qld) s 11(1)).
- Enter into an arrangement with a provider if the person knows, or ought reasonably to know, the arrangement is designed to circumvent provisions of the Act, unless a reasonable excuse exists (Labour Hire Licensing Act 2017 (Qld) s 12).
It is also important that businesses have rigorous labour hire / contractor engagement policies and processes in place to ensure compliance with the Act. These processes should be regularly audited and non-conformances actioned immediately. The consequences for businesses and individuals for failure to do so are significant.
Finally, before engaging in a labour hire service arrangement, we recommend that businesses seek legal advice to ensure compliance.
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2022.