Regulations provide welcome relief from the Labour Hire Licensing regime

The long-awaited release and commencement of the Labour Hire Licensing Regulations 2018 (Regulations) will come as a relief to many businesses which were facing the onerous obligation of having to obtain and maintain a labour hire licence, even though they were not in the business of providing labour hire services.

Background

Last year, the Labour Hire Licensing Act 2017 (Qld) (Act) was passed, introducing a labour hire licensing scheme (Scheme). Key features of the Scheme include:

• the requirement for labour hire providers to be licensed to operate in Queensland from 15 June 2018;
• a prohibition on engaging labour hire workers other than through a licensed labour hire provider; and
• 6 monthly reporting by labour hire providers of their labour hire activities.

Licences will only be granted to those providers who can demonstrate fitness and propriety, financial viability and a history of, and ability to, comply with relevant laws. The costs associated with the initial application and annual renewal of licences are not insignificant¹ and penalties for non-compliance are staggeringly high.² This is backed up by regulatory oversight from the Labour Hire Licensing Compliance Unit.

Uncertainty – who is caught?

Despite the Act being passed in September 2017, the Regulations to the Act were only passed on 6 April 2018, just 10 days before the Act was due to commence. This has led to considerable angst and uncertainty among the business community.

The angst and uncertainly arises because the potential scope of the Act is far reaching and encompasses many businesses not ordinarily considered to be in the labour hire business.

This mainly stems from the fact that the terms “provider” and “labour hire services” set out in the Act are broadly defined. Essentially, a person (a provider) provides labour hire services if, in the course of carrying on a business, the person supplies, to another person, a worker to do work.”³

The Act goes on to specify that a provider provides labour hire services regardless of:

• whether or not the worker is an employee of the provider; and
• whether or not a contract is entered into between the worker and the provider, or between the
• provider and the person to whom the worker is supplied; and
• whether the worker is supplied by the provider to another person directly or indirectly through 1 or more agents or intermediaries; and
• whether the work done by the worker is under the control of the provider, the person to whom the worker is supplied or another person.⁴

The term “worker” is central to whether a person is a provider of labour hire services. The Act provides that a worker is an individual who enters into an arrangement with the provider under which:

• the provider may supply, to another person, the individual to do work; and
• the provider is obliged to pay the worker, in whole or part, for the work.⁵

It’s not difficult to see that this definition has the potential to catch workers supplied for short term assignments (for example, secondments or project work for clients) and those who, for legitimate reasons (e.g. asset protection) operate their businesses utilising service trusts which act as the employing entity to then on-supply those workers to the entity operating the business.

The only prospect for relief for many businesses caught by the Act rested in the Regulations. This is because the Act also provides that a person is not a “worker” if he or she is, or is of a class of individual, prescribed by regulation.⁶

Regulations – relief for some

Great hope has been held by many in the business community that the Regulations would follow a common sense approach by excluding various arrangements which have been in common use for a very long time and which typically do not lead to the exploitation of workers – the prevention of which is a key objective of the Scheme.
Fortunately (and in the nick of time), the Regulations have delivered the relief from the Scheme and its regulatory oversight for those who rely on legitimate business arrangements which have had nothing to do with the exploitation of workers or the operation of a labour hire business. Those now excluded by the Regulations from being “workers” are:

• an individual employed by a provider:
  • whose annual wages are equal to or more than the amount of the high income threshold
  • under the Fair Work Act 2009 (currently $142,000 per annum); and o who is not covered by an award or enterprise agreement;
• for a provider who is a corporation—an individual who is an executive officer of the corporation and the only individual the provider supplies, in the course of
• carrying on a business, to another person to do work;
• an in-house employee⁷ of a provider whom the provider supplies to another person to do work on a temporary basis⁸ on 1 or more occasions.⁹

Conclusion

The Act requires those providing “labour hire services” to be licensed in order to continue to provide those services. It also imposes heavy penalties for contravention of its terms.

Fortunately, the Regulations have delivered relief for many businesses which would otherwise have been caught despite not previously considering themselves as being in the business of providing labour hire services.

Despite this relief, it is timely to consider whether any aspect of your operations comes within the scope of the Act, including reviewing the sources of any labour hire workers used by your business to ensure that that labour is supplied by a licensed provider.
If you think your business may be required to hold a labour hire licence, you have until 15 June 2018 to obtain a licence in order to continue to lawfully operate. We would be happy to assist you with that process if required.

1 Application and annual renewal fees range between $1,000 and $5,000 depending upon total wages paid in the last financial year.

2 For example, the penalty for providing labour hire services without a licence or engaging labour hire workers other than through a licensed labour hire provider is – for corporations – up to $378,450 or for an individual – up to $130,439 or 3 years imprisonment.

3 s 7(1) of the Act.

4 s 7(2) of the Act.

5 s 8(1) of the Act.

6 s 8(2) of the Act.

7 An in-house employee of a provider is an individual who:
• is engaged as an employee by the provider on a regular and systematic basis; and
• has a reasonable expectation the employment with the provider will continue; and
• primarily performs work for the provider other than as a worker supplied to another person to do work for the other
person.

8 This includes:
• a lawyer employed by a law firm who is seconded for a period of time to a client of the law firm to do work for the client;
• a consultant employed by a consultancy business who is supplied to a business to conduct a review for the other
business;
• a person employed by a community care organisation on an ongoing basis and who usually works for the organisation
in a variety of locations, including in another person’s home; and
• an individual who a provider supplies to another person to do work if the provider and the other person are each part of
an entity or group of entities that carry on business collectively as 1 recognisable business.

9 s 4 of the Regulations.