The Labour Hire Licensing Act 2017 (the Act) establishes a mandatory labour hire licensing scheme in Queensland which protects labour hire workers from exploitation and promotes the integrity of the labour hire industry.
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.
Key features of the Act include:
- Labour hire providers must be licensed to operate in Queensland
- People who engage labour hire providers must only engage licensed providers
- Labour hire licensees must satisfy a fit and proper person test to establish that they’re appropriate to provide labour hire services
- The labour hire business must be financially viable
- Licensees will report on their activities every six months
- There are significant penalties for breach of obligations.
The Act covers the labour hire industry and provides that a contractor is not a labour hire provider merely because the person is a contractor, enters into a contract to carry out construction work and engages subcontractors to carry out the work (section 7(3)(b)). However, this doesn't mean that a contractor is not a labour hire services provider for other reasons and also does not mean that a contractor has not engaged a labour hire services provider through a subcontract.
Under the Act, labour hire services are provided 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 one 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.
In addition to the Act, the Labour Hire Licensing Regulation (the Regulation) provides further clarification to ensure that coverage doesn’t capture unintended classes of providers or workers, including:
- Genuine secondments as long as the ‘worker’ is an employee primarily working for the employer
- Workplace consulting
- A high income worker (defined using the Fair Work Act i.e. an employee earning over $142,000 per annum and not covered by an industrial instrument)
- A worker who is the director of the business supplying themselves only
- An in-house employee who is temporarily supplied to another person. An ‘in-house’ employee is defined as an individual who is engaged as an employee by the provider on a regular and systematic basis, 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.
- 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 one recognisable business.
The Regulation also provides:
- What an applicant’s declaration of financial viability means for the Act and examples of the types of financial documents an applicant must nominate to be able to make this declaration
- Details about how compliance with specified work health and safety, fair work, migration, anti-discrimination, transport and accommodation laws will be demonstrated
- Details that the Chief Executive must have regard to when considering if a person is fit and proper to be a provider of labour hire services
- Further details about what a licensee must report on, including specific details about accommodation, transport and services used by labour hire workers
- Renewal, restoration, and application fee tiers and amounts.
Penalties are significant:
- It is an offence for a person to:
- Provide labour hire services without holding a labour hire licence or
- Engage a labour hire services provider who does not hold a labour hire licence or
- Enter into a contract for the purpose of avoiding the Act (unless the person has a reasonable excuse);
Max fine approx. $134,000 or three years imprisonment if the person is an individual.
Max fine approx. $391,000 if the person is a company.
- It may also be a breach of contract to offend the Act
- It is also an offence for a person to advertise, or in any way hold out, that the person provides or is willing to provide labour hire services without holding a labour hire licence (max fine approx. $26,000).
Whether or not an arrangement is considered ‘labour hire’ may be difficult to determine. It is crucial that, at the very least, a strong contract in writing is in place between the parties that makes it clear that the arrangement is not one of labour hire otherwise it is likely that it will fall under the Act.
Give us a call if you are uncertain whether the Act applies to your business or not.
Building industry examples
Scenarios considered as labour hire
- An unlicensed or licensed subcontractor contracts to a licensed trade contractor to provide workers on an hourly rate basis to perform work for and in the trade contractor’s business. The subcontractor doesn’t provide materials, isn’t responsible for rectifying defects, and isn’t engaged to produce an outcome. The subcontractor is simply providing labour-only services to carry out work as directed by the trade contractor.
Scenarios not considered as labour hire
- An unlicensed or licensed subcontractor contracts to a licensed trade contractor or builder on an hourly rates basis to produce an outcome e.g. frame the house, install windows and doors, install a roof, place and finish a concrete slab. The subcontractor doesn’t provide materials but is responsible for rectifying defects and is engaged to produce an outcome under a detailed written subcontract agreement. The trade contractor or builder purchase the materials. The arrangement is no different to a typical subcontractor/contractor arrangement except the subcontractor does not provide the materials to do the work.
- A building company has won a contract to develop a new block of apartments. In order to complete this work they subcontract out the electrical work to an electrical contracting company. The electrical contracting company provides a worker to the apartment construction site to complete the electrical work. This worker is employed by the electrical contracting company and is working for the electrical contracting company for it to perform its contract. The worker isn’t being supplied to work for the building company (in the sense of a labour hire arrangement).
- A licensed trade contractor or builder (“contractor A”) lends a worker to another licensed trade contractor or builder (“contractor B”) on a short term/temporary basis to perform work under the direction of Contractor B. ‘Lending workers to other businesses’ is not a regular feature of contract “A’s” business nor is it part of its business model. The ‘loan’ is an ad hoc thing that has occurred as a consequence of an unforeseen event. Contractor A charges Contractor B on an hourly rates basis for the worker. Contractor B is responsible for the work done by the worker. It’s not the dominant purpose of Contractor A’s business to supply workers to other contractors. The workers are in-house employees of the builder (as defined in the regulation).
- A builder owns a construction company that builds houses. During a house build a crucial delivery is delayed. The builder and its workers cannot continue work until this delivery is received. For the next few days until the delivery arrives, the builder temporarily loans his workers to complete work on a different site instead of forcing them to take leave. The workers are in-house employees of the builder (as defined in the regulation).
- If a worker is employed within a business that’s using an employing entity within its corporate structure (one recognisable business) and that worker is only ‘supplied’ between the employing entity and another entity within that single recognisable business.
- A construction business is comprised of a number of companies that are responsible for different aspects of the business. The business’s workers are all employed by one of the companies and are supplied to work for one or more of the other companies within the construction business. The public see the works as all part of the one companies and not the separate employment company.
For more information, visit the Labour hire Queensland website, which is supported by a dedicated Labour Hire Licensing Compliance Unit, or call 1300 576 088.
On the website you’ll also find:
- A register of licensed labour hire providers
- Avenues to report problems and contact the Labour Hire Licensing Compliance Unit
- Useful resources, including application guidance material, examples of labour hire arrangements and industry fact sheets
- Other information for labour hire providers, workers and users of labour hire.