Weatherill State Government to Regulate Labour Hire

October 31, 2017 / Spring Report 2017

Background

The Weatherill State Government has followed Queensland’s lead in seeking to regulate the labour hire industry.

On 10 August 2017, the State Government introduced the Labour Hire Licensing Bill 2017 (SA) (“Bill”).

The stated objects of the Bill are to:

• Protect workers from exploitation by providers of labour hire services.
• Protect licensed labour hire businesses from predatory business practices that may be engaged in by persons unsuitable to be licensed to provide labour hire services.
• Promote the integrity of the labour hire industry.

South Australian Attorney General the, Hon. John Rau, in his Second Reading Speech before the House of Assembly, explained that the Bill was announced in response to an ABC Four Corners report titled ‘Slaving Away’, that focused on the alleged exploitation of migrant workers which aired during 2015.

The primary “objective” of the Bill is to protect vulnerable workers.

In practice the primary objective is achieved through the establishment of a regulatory scheme whereby persons who provide a labour hire service will be lawfully required to obtain a licence.

A labour hire service provider and those who engage workers through an unlicensed provider will be liable for a pecuniary penalty under the newly proposed Bill.

Scope of the Bill

A clear disconnect exists between the noble primary objective to protect vulnerable workers and the practical operation of the proposed regulatory licensing scheme under the Bill.

The reason for the disconnect is the ambit of the Bill which because of the scope of section 6 is so broad that in its current form it would establish a regulatory licensing scheme that applies to all South Australian industries that operate to provide varying levels of skilled labour, rather than only targeting those who are exploiting vulnerable workers.

Section 6 of the Bill defines a person as providing labour hire services if, in the course of carrying on a business, they supply to another business a worker to perform work who is then subject to the proposed regulatory licensing scheme.

All legitimate traditional labour hire operators who are subject to existing Federal and State workplace laws and other laws would be required to be licensed under the Bill.

Critics of the Bill have also made the point that the broad nature of the scope of section 6 will mean that the proposed regulatory licensing scheme applies beyond traditional labour hire operators to those who supply labour as an incidental part of their business, such as accountants and lawyers who regularly provide in-house support to their clients.

The Labor Government has not provided a proper justification for the encroachment of a new regulatory licensing scheme beyond traditional labour hire.

Licensing Scheme

A person who is covered by the scope of the proposed regulatory scheme will be required to apply for a licence with the State regulator, who will be the Commissioner for Consumer Affairs.

The licence will be granted subject to the applicant and the responsible person^[1] satisfying a “fit and proper person test” that includes consideration of their reputation, honesty and integrity and that the applicant has sufficient financial resources for the purpose of carrying on business under the licence.

In the case of the applicant being a company, it must satisfy the fit and proper person test as well as all current directors of the company.

The Commissioner, must in granting a licence, specify the number of responsible persons for the licence.

A ‘person’^[2] who is granted a licence is required to:

1. pay an annual fee to the Commissioner; and
2. lodge an annual report that contains the reporting information as prescribed by the Bill with the Commissioner.

The proposed prescribed information that must be contained in an annual report includes the following:

• The full name and contact details of the holder of the licence.
• The business name, ABN and address, of the business that is the subject of the licence.
• Full name and contact details of each of the responsible Persons for the licence.
• The number of workers supplied by the holder of the licence to another person during the reporting period.
• A description of the arrangements entered into between the holder of the licence and the relevant workers.
• Details of the industry in which the work was carried out by the relevant workers.
• If the holder of the licence provided accommodation to the relevant workers in connection with the provision of the labour hire services:
  • the address of the accommodation;
  • whether the relevant workers paid a fee for accommodation; and
  • the number of relevant workers that use the accommodation.
• If the holder of the licence is aware that accommodation was provided by another person to the relevant workers to the best of the knowledge of the holder of the licence:
  • who provided the accommodation;
  • the address of the accommodation;
  • whether the relevant workers paid a fee for accommodation; and
  • the number of relevant workers that use the accommodation.
• Whether any other services were provided to the relevant workers by the holder of the licence, or to the best of the knowledge of the holder, of the licence, by a person to whom the relevant worker was supplied.
• Information about compliance with relevant laws for the reporting period by the holder of the licence.
• Disclosure of any disciplinary action taken against or started against the holder of the licence by a regulatory body under relevant law during the relevant reporting period.
• To the best of the knowledge of the holder of the licence the number of notifiable instances involving a relevant worker notified under section 38 of the Work Health and Safety Act 2012 during the reporting period.
• To the best the knowledge of the holder of the licence the number of applications for compensation made by relevant workers under the Return to Work Act 2014 during the reporting period.
• Other information prescribed by the regulations to the proposed Bill.

We expect that for many in the labour hire industry who are not used to preparing annual reports, the preparation of an annual report which contains all of this information (as well as other information prescribed by the regulations) will be an onerous task.

Other requirements under the Bill include the need for the licence holder to advise of changes in its circumstances and comply with requests for information from an authorised officer appointed by the Commissioner.

Penalties under the Bill follow the trend of significant penalties under State safety laws such that they have caught the undivided attention of South Australian recruitment and staffing organisations (and their clientele), who may be potentially at risk of significant penalties for non-compliance with obligations as follows:

• A maximum of $140,000.00 (or imprisonment for 5 years) for a natural person and
• A maximum of $400,000.00 for a body corporate.

Future of the Bill

The Labor Government is awaiting the outcome of the deliberations of the proposed Bill in the Legislative Council, having used its superior numbers to ensure its successful passage through the House of Assembly.

We will keep you informed of the passage of this important Bill.

In the meantime, if you wish to discuss the Bill (including whether its scope means that it could apply to you or other concerns that you have about the Bill) please do not hesitate to contact us.

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^[1]      who following the model of earlier State safety laws shall be the person required to ensure compliance of the licence holder with the obligations under the proposed Bill.

^[2]      which is defined to include a company.

For more information, please contact:

This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.