South Australia has passed the Labour Hire Licensing Act 2017, joining Queensland, which introduced its Labour Hire Licensing Act in September 2017. This follows a critical focus on the industry, led in part by a Four Corners investigation which uncovered rampant exploitation in the food production industry, mostly affecting labour hire workers.

Section 6 of the Act defines labour hire services as “a person (a provider) who provides labour hire services in the course of conducting a business.”

Labour hire services are defined as “engagement arrangements” generally understood to mean ‘on-hire’ but which will capture other engagement arrangements. Under this broad definition, engagement arrangements may include, by way of example:

  • Host employer arrangements;
  • A corporate health service which supplies a nurse to deliver vaccinations to a business;
  • Temping agencies; and
  • Joint venture participants.

The Act commences operation on 1 March 2018.

Businesses must be aware that:

  • It is unlawful to operate as a labour hire provider without a licence; and
  • It is unlawful for a person to enter into “an arrangement” with another person for labour hire services when they do not hold a licence.
    • o Maximum penalty: up to $140,000 for individuals or 3 years imprisonment and $400,000 for a body corporate.
  • It is unlawful to advertise or hold out that a person can provide labour hire services without a licence
    • o Maximum penalty: $30,000;
  • It is unlawful to enter into an arrangement for the supply of a worker to avoid an obligation under the Act (referred to as an avoidance arrangement)
    • o Maximum penalty: up to $140,000 for individuals or 3 years imprisonment and $400,000 for a body corporate
  • Further, there is a positive obligation to report another person who has supplied them with a worker in circumstances where the supply of the worker is an avoidance arrangement.
    • o Maximum penalty: up to $30,000.
  • Individuals will be tested as to whether they are a “fit and proper person” to hold a licence, including whether they are honest, have integrity and professionalism.
  • Licence holders are required to report annually to the Commission. Reports are to contain a number of matters including (but not limited to) the number of workers supplied by the holder of the licence and a description of the arrangements entered into.
  • Licence holders are to pay an annual fee to the Commission as prescribed by the Regulations (yet to be drafted).
  • License holders may only be absent from the licence holder’s business for a period of 30 days. In their absence they must appoint an individual who is a responsible person as a substitute responsible person for the licence.
  • If a licence holder is absent from the business for a period of more than 30 days the Commissioner may, on application appoint another individual as a substitute responsible person.

What does this mean for businesses?

  • An urgent review should be conduct of all service provision contracts;
  • An assessment must be made of the requirements to be met by businesses and labour hire employers in time for March 2018;
  • Penalties for breach are at the higher end of the scale; and
  • Employers who supply labour hire services will be subjected to stringent reporting requirements and annual fees.

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