Founder and Director
Principal. Health and
Safety Risk Expert
Director of Risk and
Partner, Workplace Relations
Moray & Agnew
It’s clear the intent of the scheme in Queensland has been about protecting workers vulnerable to exploitation. These workers have traditionally been in the horticultural, agricultural and franchise industries. However, the definition of ‘labour hire’ under the legislation is very broad, and from the Queensland Government website, is stated as….
The examples of providers listed include…
- a contractor who supplies workers to a farmer or fruit grower to pick produce for the farmer or grower
- a group training organisation or principal employer organisation under the Further Education and Training Act 2014 that supplies an apprentice or trainee to an employer
- an employment agency who on-hires temporary administration staff to a business
- Video production company: labour hire is not its core business. But a client of theirs, wants one of their experts to come into the client’s business for a period of time, to work on a project. THAT would be considered labour hire. The problem is, how many of these companies are not going to realise that although they’re not labour hire providers, these laws apply to them. Overall, recognition of the laws is very low: many users and providers don’t appreciate the laws will apply to them.
So in summary, from what we know right now, if a company supplies a worker to another company and makes payment to that worker, they are a labour hire provider and must be licensed.
But under the interpretation of the law – as broad as it is - there’s an extraordinary amount of businesses that may fall under the definition of this law, who may not realise they are technically labour hire, and could get caught by this regulation.
Unfortunately, there’s potential room to move here, in regards to the legal interpretation of the law. Is it being crafted for an outcome? We wonder…
As such, there’s a lot of scope around how labour hire is being defined. However, there are exceptions. For example:
- if the workers earn above the legislative remuneration gap, which is above $150k (specifically, this refers to a high income employee who earns more than $142k pa and isn't covered by an industrial award or agreement)
- where the organisation is a genuine sub-contractor organisation
- When it’s a genuine subcontracting arrangement. Here’s an example of a scenario which appears to be a genuine subcontracting arrangement and is therefore not considered to be labour hire.
A subcontractor contracting to a builder on an hourly rate basis to produce an outcome (eg install windows and doors). The sub-contractor does not provide materials, it is the builder who purchases the materials. The sub-contractor is however responsible for rectifying contractual obligations and rectifying defects.
The difference is this: a genuine sub-contractor is sub-contracted for the purpose of achieving a result. That’s all we can take from that definition.
With the legal definition being as broad as it is, to make assumptions about whether or not your business would fall under this legislation, is very dangerous.
And importantly, if you’re the user of a labour hire company, you too must ensure that your provider is licensed. Otherwise, you’re both liable for penalty under the law. So it’s critical for organisations to check if the arrangements of their labour hire provider under the act, and ensure that only licensed labour hire providers are used by their organisation.
The general consensus is that labour hire users aren’t ready for this change: particularly given it’s difficult to get the business community engaged in a topic like this.
What about smaller businesses, SME’s who are the engine of Australia’s economy – at what point could they even KNOW this information is out there?
The answer is, they won’t. And as this law is a blanket approach, it doesn’t discriminate according to business size. Think about this example – when a builder’s business is quiet, they often 'lend' their workers to other builders: which is ostensibly a form of labour hire. As such, they're liable under this legislation. Critically, it's likely most small business in many industries, would fall foul, just like this builder example. Problem is, as there's a good chance they won’t know about the law, they're in a position of risk.
- Tier 1 Business – wages of less than $1.5 million – $1,000 licence fee
- Tier 2 Business – wages more than $1.5 million but less than $5 million – $3,000 licence fee, and
- Tier 3 Business – wages more than $5 million – $5,000 licence fee
- For new businesses, their tier will be designated on the basis of their projected wages for the coming financial year.
- in addition to holding a licence, compliance with all the laws relevant to operating a labour hire business
- lodge a report on activities to the chief executive every six months online (an idea of the extent of administered inconvenience required)
The law comes with a well-founded objective: protecting workers who are falling prey to unscrupulous employers. No one wants to see exploitation of workers, or the usage of loopholes to be able to pay workers less than what they’re entitled to (i.e. a fair market rate).
Charles Cameron: there’s an unnecessary amount of red tape which has been created without dealing with legal or unscrupulous operators. Keep in mind, Unions who are amongst the architects of the scheme, are obviously coming out in favour, saying this is necessary to safeguard fairness particularly of workers who are being left behind. Is this potentially a Union campaign? It benefits the opportunity of collective bargaining and helps to highlight the real situation of flat wages in Australia, providing even further impetus for Union support.
Really, the main objective of the laws, need to be safeguarded – which isn’t evident throughout the wording. Hence, caution needs to be taken.
The concept that the law would be more effective if it was grouped into industries, is a sound one. Exploitation, as we have discussed, is very industry based. Farm work, contract cleaning for example – these categories need protection.
Another area of focus: use of labour in government, secondary only to the industries that are flagged as being primary targets for exploitation.
What is the legal and technical distinction between a permanent employee and an independent contractor?
Sadly, there’s no common law distinction. And employment lawyers today, must use a 1980’s definition of what an independent contractor is. Crazy stuff. Why then, isn’t the regulation dealing with this?
Unfortunately, in a modern, progressive economy, this law seems to be operating under a limited, dated framework. Looks like some of the definitions upon which new legislation is being crafted, need to step into the modern era.
Some organisations are starting to take practical measures in preparation for these changes. For example, creating genuine sub-contracting arrangements, rather than arrangements that would be classified as labour hire. However, limited awareness prevails.
The feeling is that we’re unlikely to see mass enforcement & prosecution. What we may see, is certain industries being made an example of. Ultimately though, it will be interesting to observe whether the government targets industries and groups, where there's been clearly documented past issues, in the hope of upholding the core intent of the legislation
But be warned: there’s no limit on the industries or occupations that can be impacted by this law. So the best advice is don’t assume this legislation is only going to be used to target the highest risk workers, in the highest risk industries.
Even if you advertise, or have workers on the ground, you will have to explore the extra provisions that this new law, covers.
As a labour-hire provider, being prepared from a risk perspective is the biggest issue. And a big risk sits also with companies engaging the labour hire firms – so the onus is not just on the labour hire firms themselves.
What systems are you putting in place to understand if the labour-hire firm is licensed?
Do they need a licence?
If the labour hire provider you're using aren't licensed, you need to think about not using them. Keep in mind, this isn’t about your knowledge as a labour-hire user, but about what your knowledge OUGHT to be.
If the firm says they don’t need to be licensed, but you uncover or believe that they do, you need to take action or engage an alternative provider to keep yourself removed from risk.
Online platforms, hybrid labour-hire/talent supply companies, peer-to-peer placement: there’s great uncertainty for these industry participants. And it’s a hot button issue: a great many believe that progress can't be stifled by bureaucracy and legislation.
Take a look at BenchOn: they assist in being able to offer ongoing, periodical employment to workers, during quiet times with their permanent employer. But this great market offering is under threat from these new labour-hire regulations. Stifling progress has the potential to be a significant hand-break to Australian small-business & tech innovation.
The platform based, peer-to-peer economy and the human-based workers as contractors – are quite different. Believes the former will unlikely be affected by this law
Think about the gig economy: and the unintended consequences – eg Uber driver – may well find an avenue to wriggle out of the obligations of these laws…. But the highly paid gig economy worker, who’s not being exploited, could be more obviously in breach.