Labour Hire Licensing Scheme

As of 1 November 2019, Victoria’s new Labour Hire Licensing Scheme comes into force. If your business hires workers from another business to work for you, you will need to ensure that they are registered under the Labour Hire Licensing Scheme or otherwise risk facing civil penalties in excess of $500,000.00.

Importantly, the Scheme covers far more than just traditional labour hire companies. For example, commercial cleaning businesses are covered, meaning that all businesses using commercial cleaning services need to ensure that their cleaning providers are registered with the Scheme.

When am I hiring labour from a labour hire provider?

A business will be providing labour hire services to you if, in the course of their own business, they supply one or more workers to perform work in your business.

Recruitment and placement management businesses that provide accommodation to workers and certain contractor management providers are also covered by the Scheme.

The key requirement for an individual to be a worker under the Scheme is that they work ‘in or as part of’ your business, rather than as part of provider’s business. The Explanatory Memorandum that accompanied the Labour Hire Licensing Bill 2017 provides the following examples:

• Where a business provides workers to another business to work alongside their own employees on a production line, under the supervision of the other business, that initial business will be providing labour hire services.
• However, an accounting firm that provides accounting services to prepare tax documentation for a client’s business will not be providing labour hire services, because they are working as part of the accounting firm’s business and not the client’s.

In addition to the general scope of the Scheme under the Act, the Regulations make explicit provision of the certain classes of workers who are and are not covered by the Scheme.

Workers who are covered by the labour hire licensing Scheme

The Regulations provide that the following classes of workers are covered:

• Cleaners of commercial premises,
• Workers performing basic horticultural work (such as picking, sorting and packing fruit and vegetables),
• Workers carrying out meat manufacturing and processing, and
• Workers carrying out poultry processing.

We expect the inclusion of commercial contract cleaners, in particular, is likely to affect many businesses that would not ordinarily consider themselves users of labour hire services.

Workers who are not covered by the Scheme

The Regulations provide a number of exceptions to the Scheme who are not covered:

• Individuals working on secondment,
• Individuals provided by one business to another, where those two entities carry on the one business (this covers situations where you have two related companies that both undertake the one business),
• Students completing work experience, and
• Students completing vocational placement.

Registration under the labour hire licensing Scheme

There appears to be a significant amount of uncertainty about who needs to be registered under the Scheme. If a business that provides workers to you is not registered under the Scheme, we recommend asking them why they are not registered.

Have any further queries?

If you are in doubt yourself about whether a business is compliant with the law, please feel free to contact us for advice. Call Managing Principal and Accredited Specialist in Commercial Law, Mitchell Zadow on (03) 8561 3318 or fill in the contact form below.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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