Victoria’s Labour Hire Licensing scheme may cause some headaches as it tries to extend its coverage to contractor management service providers. That’s because there’s likely to be uncertainty about what a contractor management service provider actually does.

Section 8(2) of the Act provides:

 (2)     A person (a provider ) provides labour hire services if—

(a)     in the course of conducting a business of providing contractor management services, the provider recruits one or more individuals for, or places one or more individuals with another person (a host ) to perform work in and as part of a business or undertaking of the host; and

(b)     the individuals are workers for the provider, within the meaning of section 9(2)(b).

The explanatory memorandum, which accompanied the legislation in its passage through Victorian Parliament somewhat unhelpfully explained:

“Contractor management services” is not defined in the Act, but has its ordinary meaning, which covers services whereby a business recruits independent contractors on behalf of a third party (host) and, following engagement of the independent contractors by the host, continues to manage the performance of the contract between the independent contractors and the host. This might include, for example, providing administration and payroll functions, supervision functions or performance management functions in relation to the independent contractor.

Section 9(2)(b) attempts to define who is a worker for a contractor management services provider.  It says:

An individual is a worker, for a provider, if an arrangement is in force between the individual and the provider under which the provider—
(a) … or
(b) recruits the individual as an independent contractor for one or more other persons to perform work, and manages the contract performance by the independent contractor.

But what if the contractor appoints the business to manage the performance of the contract (or parts of it) – i.e. the business is a contractor appointed CMC (it happens)?  Does it make a difference?

And what if the contractor is not an individual (as required by s. 8(2)(a) and 9(2)(b)), but is an incorporated worker instead?

What if the provider recruits the incorporated entity and leaves it to the incorporated entity to recruit or provide the individual – perhaps under the reg.4(1)(c) exception?

Does the incorporated worker exception still apply if the contractor is supplied as a cleaner in a commercial premises? (see reg. 5(a)).

What other outsourced functions, apart from administration and payroll functions, supervision functions and performance management functions, amount to contractor management services according to the “ordinary meaning” – whatever that is? Would the provision of safety inductions be enough? Would onboarding assistance, or “performance monitoring” for the purpose of managing a candidate replacement guarantee be enough?

And does managing, say, payroll really amount to managing the contract performance by the independent contractor? Isn’t payment an obligation that falls on the “host”? Although the explanatory memorandum spoke about managing both contractor and host performance, the Act doesn’t. It speaks only of managing contractor performance.

These might be the sorts of questions that the Authority would be keen to dismiss as questions “asked by clever lawyers” – as though that were a bad thing. But thank goodness there are some who are asking them and attempting to answer them… because, at some point, they’re going to be contested as matters of black letter law and not merely as a “vibe” picked up from a current affairs programme, a campaign manifesto, or a regulator’s website.

And before we ever get to that point, there’ll be plenty of providers, hosts, and contractors wanting to know where they stand.

Andrew C. Wood