I recently attended an information session by the Labour Hire Authority (“LHA”) with my colleague Michael Stafford. The session was presented by the Labour Hire Licensing Commissioner, Mr Steve Dargavel, and aimed to provide clarification regarding the applicability and operation of the Labour Hire Licensing Act 2018 (Vic) (“Act”). I was particularly interested in a host’s obligations, as many of my clients have been enquiring about this.
Among many other things, I was hoping Mr Dargavel would provide specific clarity as to:
- What obligations a host has; and
- What enquiries a host should make to see if their provider requires a labour hire licence.
Despite obtaining some good information, I was relatively disappointed with the lack of clarity concerning the enforcement of the Act (specifically regarding a host’s obligations). What intrigued me most was a question from the audience. The gentleman’s business is operating as a host under the Act and questioned to what extent a host should make enquiries of their contractors to determine if they are considered labour hire providers under the Act. The scenario presented was:
“Is it sufficient for a host to accept if one of its contractors stated it wasn’t a ‘labour hire provider’ under the Act (and provided legal advice to that affect)? Or does the host still risk fines under the Act, if the LHA decides the contractor is a labour hire provider and, therefore, operating illegally?”
Unfortunately, I did not find Mr Dargavel’s answer to be particularly insightful and the Commissioner simply stated words to the effect of “such a defence is unlikely to be sufficient if we were to seek enforcement of penalties against your company” reiterating a company/host will breach the Act if they use an unlicensed provider.
The Commissioner clarified he can consider all the circumstances when a company is deemed to be in breach of the Act. However, he provided little clarification as to what this means or how it might work in practice. For example, there’s still no telling what penalties might apply (if any) if a host organisation takes all reasonable steps (i.e. seeking legal advice) to make a determination as to whether their contractor:
- Was correctly licensed; and/or
- Requires a license given the services they provide,
and arrives at the wrong conclusion.
Ultimately, the Commissioner said the issue is ‘a matter of fact’, stating “contractors are either labour hire providers or not”. Consequently, it is seemingly on the host to know this and arrive at the right conclusion in the first instance.
Obviously, this created some confusion with the audience and ‘muddied the waters’ further. Specifically, issue was raised with:
- How far a host should go looking into another company’s affairs (and what right do they have to do so); and
- The impact this may have on a business’ relationships.
What should a host do?
Overall, what I took from Mr Dargavel’s session and my advice to hosts is:
- If a contractor states they are not subject to the Act, the host should obtain their own legal advice as to whether this is correct (even if the contractor provides its own legal advice confirming their position);
- Get an advisor ‘in your corner’ who understands your business and is readily available to provide clarity on the legislation and your obligations under the Act;
- Speak to your advisors (i.e. accountant or commercial advisor) about how the structure of your business can affect the fees payable; and
- Be careful of engaging contractors who state they do not need a licence under the Act, especially if it is contrary to your ‘gut feel’ (just run it past your advisor).
So, what do we know for sure under the Act?
- The Act applies to both labour hire providers and hosts (as defined in the Act);
- Labour hire providers have until 29 October 2019 to apply for a licence before risk being penalised;
- There are significant penalties for non-compliance with the Act:
- If you are providing labour hire services in Victoria, you need to apply for a license, regardless of where your business is located;
- There are significant fees involved with the application and the ongoing licence depending on a business’ turnover (not limited to turnover in Victoria or turnover from the labour hire activity, but total annual turnover for thewhole company);
- Hosts must only use licensed providers post 29 October 2019;
- Hosts must make their own enquiries regarding a contractor’s coverage;
- Before engaging a labour hire provider, the host must check the online Register of Licensed Labour Hire Providers; and
- The hosts must enquire whether their planned provider has applied to be licensed, by checking the separate online list of ‘Applications received’ on the LHA website.
Need Specialist Help?
After 29 October 2019 a host can only engage labour hire providers with a licence (or those who have applied a licence), otherwise they risk being penalised. If you are unsure whether your business is using an appropriately licensed labour hire provider and need some specialist external help on labour hire licensing – or any other workplace issue – please get in touch. We offer a complete range of employee management and workplace relations services.