Victoria’s Labour Hire Licensing Bill – What you need to know

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With a Labour Hire Licensing Bill pending in Victoria, many unsuspecting businesses could be affected. We go through the key points both providers and hosts need to be aware of.

A Victorian Labour Hire Licensing Bill is on the way. Labour hire licensing has been a recent agenda item for most Australian state governments. The Queensland and South Australian governments were the first cabs off the rank, with their legislation passed in late 2017. The Victorian Government is, at the time of writing, currently debating its legislation in the second house.

If your organisation provides supplementary resources into your clients, or your organisation uses supplementary resourcing, you MUST read this. Your business model will be affected.

A Victorian Labour Hire Licensing Bill is on the way

The advent of a Labour Hire Licensing Bill in Victoria has not been widely reported, and even if you were aware of the move towards labour hire licensing, you could be forgiven for thinking that it only applies to primary industry. But, while it’s true the drive for this kind of legislation certainly came in significant part from the agricultural sector, the Bill being debated has far wider implications across all industries in Victoria.

This post explains how all private and public sector organisations could potentially be affected, and what they need to know about this new legislation.

Who needs to understand the Labour Hire Licensing Bill?

Anyone who employs staff to work in other organisations, and any organisation that uses staff who are provided and paid by a third party, are potentially impacted by the Victorian Labour Hire Bill.

Labour hire, sometimes called labour supply, is when an organisation (the ‘host’) buys labour resources from another employer (defined as the ‘labour hire company’), usually under a contract for service, to meet short or long-term requirements.

The crucial difference between labour hire workers and casual or temporary employees is that labour hire staff do not work for the host, they are employed by the labour hire organisation. Within the Labour Hire Licensing Bill, a labour hire organisation is categorised as ‘anyone who supplies one or more individuals to another person (a host) to perform work in the host’s business, and the individuals are workers for the provider’.

Many businesses deliver services through the provision of resources that may or may not spend a period of time at a client’s site. If you are a business that employs this operating model it’s likely that the business will be captured under the broad definitions within the Labour Hire Bill.

Why is the Victorian Government introducing the Bill?

The Labour Hire Licensing Bill is the Andrews Government’s response to the 2015 Victorian Inquiry into Labour Hire and Insecure Work, which found evidence that workers in the labour hire industry were, or were at risk of being, underpaid and exploited particularly in the agricultural, meat and cleaning industries.

Labour hire is recognised as a necessity in many industries, giving organisations the scope to rapidly scale up and down as businesses go through peaks and troughs in demand. Labour hire makes a significant contribution to the Victorian economy, as well as to many individuals who work in the sector.

However, the inquiry found that, in some cases, labour hire workers were effectively ‘second class citizens’ and received lesser treatment in terms of health and safety, dismissal and rostering, when compared with their permanent employee counterparts.

The issue was considered to be largely driven, and certainly exacerbated, by the lack of visibility into the labour hire industry. Unlike other industries, there is currently no regulatory framework, no licensing, no standards by which employers have to abide, and no consequences for not doing so. Anyone can set up a labour hire agency and on-sell staff to host-employers.

The Labour Hire Licensing Bill aims to address this by requiring labour hire agencies to register and be subject to regulation and audit, and by establishing a framework and officers with powers to police the industry.

The Labour Hire Licensing Bill potentially has far-reaching implications for businesses and for government departments. So what changes will the Bill bring and, importantly, what do those in the labour hire industry need to know?

What is the Labour Hire Licensing Bill?

The Labour Hire Licensing Bill ensures a more closely regulated labour hire market by:

  • Establishing a licensing system to regulate the provision of labour hire services
  • Establishing a Licensing Authority, Licensing Commissioner and licensing inspectors
  • Imposing penalties on providers who are not licensed, and
  • Imposing penalties on those who procure labour services from non-licensed providers.

What labour hire providers need to know

Existing labour hire providers will have to apply for a licence to operate their business. They will have to provide details about themselves, their business and its officers, including:

  • Demonstrating those who run the business are ‘fit and proper persons’
  • Registration with the ATO
  • Registration with Work Safe Victoria
  • Number of workers supplied – actual over the last 12 months for an existing business or planned for the next 12 months for a new business.
  • The terms and conditions of those workers
  • The visa status of all workers
  • The industries into which they supply workers
  • Any relevant investigations, incidents or claims
  • Whether they supply accommodation to workers

The licence must be granted unless there is a valid reason not to do so and, once approved, the licence is valid for three years, when a renewal request can be submitted. Licence holders are subject to inspection and will need to meet mandatory reporting requirements. Any labour hire business that operates without a licence will be subject to fines.

What host organisations need to know

If you are hiring resources through a labour hire organisation, once the Bill is passed you will only be able to use those providers who hold a valid licence. It will be unlawful for a host employer to engage a non-licenced labour hire agency and the Licensing Authority will have the power to issue fines to hosts who do so.

Timing

The Labour Hire Licensing Bill was passed by the first house in February 2018, and on the same day received its first and second readings in the second house. It is widely expected to be passed by the second house and become part of Victorian legislation in 2018.

What next?

For workers, hosts and labour providers alike, the Labour Hire Licensing Bill brings widespread changes (and possibly some unintended consequences) in the way that resources are purchased. Government departments and private sector organisations alike will need to be aware of these changes and understand the impact for their organisation.

Read more and become familiar with the Bill and, above all, have the conversation, sooner rather than later, with your host or provider to ensure that you’re both ready for the changes ahead.

 

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