Labour Hire Licensing Scheme Bill Introduced in ACT and SA Bill for Scheme to be Amended

Thursday 27 February 2020 @ 9.13 a.m. | Industrial Law | Legal Research

The ACT and South Australia have both recently introduced legislation dealing with Labour Hire Licensing Schemes. The ACT Government recently introduced the Labour Hire Licensing Bill 2020 (the ACT Bill) into the ACT Parliament, while the South Australian Government recently introduced the Labour Hire Licensing (Miscellaneous) Amendment Bill 2020 (5 of 2020) (the SA Bill) which proposes to make important changes to the Labour Hire Licensing Act 2017 enacted by the previous SA Labor Government.  

The ACT Bill

The ACT Bill was presented to the Assembly on 20 February 2020 by the Minister for Employment and Workplace Safety, Suzanne Orr MLA. According to the Minister, the ACT Bill is aimed at "better protecting labour hire workers in Canberra". The ACT Bill is further described as the "first ever labour hire licensing scheme for the ACT" with its object being to "ensure all labour hire providers meet the workplace obligations and responsibilities they have to their workers, with penalties to apply to any providers in breach of the scheme.

The ACT Bill will establish a scheme that will require labour hire providers to apply for a licence, meet a "suitable person" test and demonstrate a history of ongoing compliance with industry standards and workplace laws. The ACT Government says its aim is to encourage responsible employment practices in the ACT labour hire sector by creating a framework that is effective in preventing and responding to non-compliance with workplace standards in the labour hire industry by requiring:

  •  labour hire operators to be licensed and pay a fee for the licence;
  •  disincentives for use of unlicensed labour hire operators;
  •  a "suitable person" test to determine suitability for licensing; and
  •  licensees to demonstrate a history of, and ongoing compliance with, industry standards and workplace laws.

According to the Minister:

“A labour hire licensing scheme will ensure the rights and conditions of labour hire workers in the ACT are upheld with new penalties to apply to providers who do the wrong thing, . . . Recent inquiries across the country, including here in the ACT, have highlighted the vulnerability of labour hire workers to poor treatment at work. In response to these unacceptable practices, the Government is today delivering better protection for these workers."

In the ACT Bill the meaning of "labour hire services" is provided in clause 7(1) as follows:

"For this Act, a person (a provider) provides labour hire services if, in the course of carrying on a business, the person supplies to another person (the hirer) a worker to do work."

Clause 7(2) of the ACT Bill provides a worker is supplied by a provider when the worker starts to do work for the hirer and clause 7(3) sets out that a provider provides labour hire services regardless of whether—

  • the worker is employed by the provider; or
  • there is a contract for the worker to do the work; or
  • the worker is supplied to the hirer directly or indirectly; or
  • the work completed by the worker is under the control of the provider or the hirer.

The ACT Bill does allow for the exemption of certain labour hire operators or classes of operations from the ACT scheme, or the declaration of certain operators or classes of operators to be covered by the scheme and also includes a review mechanism for the operation of the scheme. Clause 7(4) of the ACT Bill provides a regulation making power that allows exceptions to be made by stating that a person is not a provider of labour hire services for the purposes of clause 7.

According to the Minister's media release, the scheme to be created by the ACT Bill is anticipated to commence in 2021 and will have a transition period of six months beginning in January 2021 for labour hire providers to apply for a licence. A publicly available licence register will be established to assist businesses, workers and the community to know if they are dealing with legitimate labour hire providers.

The SA Bill

The SA Bill was introduced into the SA Parliament on 20 February 2020 by the Treasurer, R I Lucas MLC. The SA Bill proposes to amend the Labour Hire Licensing Act 2017 to "ensure that the law applies only to labour hire providers operating within high-risk industries where workers are vulnerable to exploitation". The aim of the amendments proposed by the SA Bill are stated as being to "narrow the scope of the scheme". They also include amendments to enable additional high-risk industries to be prescribed by regulation if and when required.

Some examples given by the Minister, in his second reading speech, of businesses currently captured by the Act that will not be captured if the proposed amendments are passed, include:

  • IT consultants being outsourced to various businesses;
  • dental labour hire businesses providing hygienists, dentists and receptionists;
  • legal firms engaging in labour hire by providing legal practitioners to work within other businesses as in-house counsel or barristers being sent to work for various clients;
  • universities sending academic staff to other education institutions, as well as medical professions being sent to act as lecturers at universities; and
  • church ministers being sent to other parishes where the resident minister is unavailable.

According to the Minister, the SA Bill results from the Government having sought to repeal the 2017 Act and having failed to do so. Accordingly, the Government is now seeking the amendments proposed to “narrow the scope” of the scheme to ensure that the 2017 Act applies "specifically to labour hire providers operating within high-risk industries" where workers are more vulnerable to exploitation, rather than capturing industries where there is no suggestion of worker exploitation occurring. Industries believed to fall into the high-risk category are identified by the Minister as being industries, where the work performed is labour-intensive, low skilled and is primarily undertaken by migrant workers who are particularly vulnerable to exploitation. For example, fruit picking is commonly cited as one of the main types of work performed by non-English-speaking migrants.

Other proposed amendments in the SA Bill include:

  • prescribing specific work activities focusing on low-skilled work within the prescribed high-risk industries;
  • excluding in-house employees where individuals are engaged on a regular and systematic basis to avoid capturing genuine employee arrangements rather than labour hire work arrangements;
  • removing all imprisonment penalties;
  • requiring labour hire providers to disclose certain information to their workers;
  • refining prescribed information that is required annually to focus on information relative to compliance;
  • differentiating between licensees and responsible persons when considering whether a person is fit and proper (in relation to insolvency);
  • an evidentiary provision in relation to proceedings for an offence against the Act, where an individual supplied by a provider is deemed to be a labour hire worker in the absence of proof to the contrary; and
  • better aligning annual reporting periods of payment of periodic fees with existing legislation administered by Consumer and Business Services.

The SA Bill is currently at second reading stage in the Legislative Council.

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Labour Hire Licensing Bill 2020 [ACT], explanatory statement and second reading speech available from TimeBase's LawOne Service.

Labour Hire Licensing (Miscellaneous) Amendment Bill 2020 (5 of 2020) [SA] and second reading speech and explanatory material available from TimeBase's LawOne Service.

Media Release: Labour hire licensing scheme to improve working conditions in the ACT (Suzanne Orr MLA, Minister for Employment and Workplace Safety, 20/02/2020)

ACT introduces labour hire licensing scheme (Andrew Brown, Canberra Times, 20/02/2020)

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