Concerns about the labour hire industry are not new, especially issues of wage theft, poor workplace health and safety practices, and denial of worker rights. As a result, the ACT Government has enacted legislation to establish a new Labour Hire Licencing Scheme to help protect workers who are employed under labour hire arrangements, and improve compliance.
As set out below, the new Scheme is broad in application, and many businesses who do not consider themselves ‘labour hire providers’ may in fact be covered by the Scheme. The Scheme also carries with it significant penalties for non-compliance − both for labour hire providers and organisations who use their services.
1. What is the Labour Hire Licensing Scheme and to whom does it apply?
The Scheme, established by the Labour Hire Licensing Act 2020, requires any person or organisation that provides ‘labour hire services’ to hold a licence before they can provide such services in the ACT.
‘Labour hire services’ is defined broadly in the Act and includes anyone (the Provider) who supplies a worker to another person (the Hirer) to do work. This means that relationships outside the traditional labour hire model could be covered by the Scheme, regardless of whether the worker supplied to the Hirer is an employee or contractor, or whether the worker is supplied directly or indirectly to the Hirer.
There are, however, some exemptions. Labour hire providers who engage the following types of workers under a labour hire arrangement are not required to hold a licence in relation to those workers:
- public sector employees
- high income workers − where a person’s annual wages are equal to, or more than, the high income threshold and their employment is not subject to, or covered under, a modern award or enterprise agreement
- Secondees/in-house workers
- a person who is employed by an entity, and only supplied to work within a single business (this usually applies to larger businesses with a ‘group’ structure)
- a director or senior manager of a corporation − where the corporation has not more than two directors and that person is the only person who is supplied by the corporation to undertake work for another person.
2. How do you get a licence?
A person or organisation who provides labour hire services under the Act (Provider) must apply to the Labour Hire Licence Commissioner for a licence. The current WorkSafe Commissioner has been appointed as the Labour Hire Licence Commissioner, and WorkSafe ACT is the government agency that will be administering the Scheme, including the application process.
For the licence to be issued, the Commissioner must be satisfied that the Provider is a “suitable person” to hold a licence and has a demonstrated history of ongoing compliance with industry standards and workplace laws. This will include assessing the Provider’s character, previous compliance with workplace laws and standards, historical insolvency issues and other considerations.
Licenced Providers will be listed on a public register by WorkSafe ACT.
Licences under the Scheme cannot be issued for more than 12 months and require annual renewal. There is a licence application fee of $2,900.00 and an annual fee of $2,900.
3. When does the Scheme start?
The new Scheme will commence on 27 May 2021. There will be a six-month transition period to allow Provider’s time to obtain a licence, and the Commissioner will not take any compliance action against a person who is providing labour hire services but does not have a licence during this period.
By 27 November 2021, any Provider that does not hold a licence cannot supply labour hire services to the ACT.
4. What are the penalties?
After 27 November 2021, Providers that do not have a licence, and employers who use an unlicenced Provider, could face severe penalties.
The maximum penalty that can be issued by the Commissioner for a contravention of the Scheme is $177,600.00 (or 800 penalty units) for an individual and $666,000.00 (or 3,000 penalty units) for a corporation.
A person commits an offence if they falsely represent that they hold a labour hire licence when they do not. In addition, this specific contravention carries a maximum penalty of $44,400.00 (or 200 penalty units).