Do Auto Club Breakdown Contractors Need Labour Hire Licences?

Adac breakdown assistance

The background

Like me, you might be wondering how that question even arises. It shouldn’t be a problem because it should be clear to anyone who hasn’t been overthinking it, that a motor mechanic business is not a labour hire businesses. It should be clear that the labour hire licensing laws, which have now been established in three states,[1] didn’t come about because of any real concern about worker exploitation in automobile club roadside assistance schemes.

But you can throw clarity out the window as soon as you get legislation that tries to cast the widest possible net without too much thought about what it might catch.

And to cast that net, Victoria and South Australia included a provision in their licensing schemes that says you need a licence if you’re supplying workers to another person to perform work in and as part of the other person’s business or undertaking.

Integration test

The critical wording is, “perform the work in and as part of the business or undertaking of the other person”.

It’s sometimes called an “integration test”, and it helps to distinguish ordinary contracting for the supply of services from labour hire. It distinguishes the kind of thing motor mechanics do in their own workshops or on roadside callouts from the kind of thing a labour hire provider does when it sends its workers to help out in that workshop or at the roadside.

The provisions in the different states vary slightly in the way they are expressed, but we needn’t worry about that just at the moment.

The problem also arises in Queensland, where the legislation doesn’t even provide guidance in the form of the integration test.

The question

So, if you are a motor mechanic business that is contracted to an automobile club (or anyone else for that matter) to provide a roadside assistance service, how do you tell if you are supplying workers to perform the work in and as part of the business or undertaking of the host automobile club, rather than in and as part of your own business?

It’s complicated!

If you ask the Victorian Labour Hire Authority, assuming you’re able to get a response before the cut-off date for lodging licence applications[2], they’ll probably tell you that they don’t give legal or business advice. They might, however, direct you to some scenarios which they’ve developed to help explain what they think their general definition of labour hire services means… and leave you to work it out for yourself.[3]

What you’ll read repeatedly is that “no one factor is definitive” and that it’s necessary to “look at the engagement as a whole”.  You’ll see examples of construction workers being sent along to do work alongside workers of a building firm being treated as labour hire workers regardless of whether the firm that sends them self-identifies as a building and construction firm or a labour-hire firm.

Positive factors

You’ll see that the Authority has identified a few positive indicators for identifying a labour hire relationship:

  • the work performed by the workers is a key function of the host’s business;
  • the work performed by the workers is the same as the work performed by the host’s own employees;
  • the host supplies the materials, and directs and supervises the work;[4]
  • the workers are doing work that the host is responsible for completing.

So, you look at the arrangement as a whole, weigh up a set of factors like that, and you reach a conclusion. Should be easy!

Secondee exception?

Once you’ve reached a conclusion. you might have to decide whether any of the regulatory exceptions apply. That can get tricky because they differ from state to state.

But one exception you might consider is the “secondee exception“. I’ve written about that in the context of footy clubs and their loan players.

In Victoria, you’d want to have a good understanding of the contractor’s employment arrangements, the breakdown mechanic’s expectations about continuing employment and whether the mechanic primarily performs work other than as a roadside assistance mechanic. if you’re a host, you’d want some assurance about those things and you’d want notification of any changes.

In Queensland, this would be the in-house employee exemption. it has much the same features as the Victorian secondee exception but only applies if the provider supplies the in-house employee to the other person to do work on a temporary basis on 1 or more occasions. There would have to be some doubt about whether it applies to a roadside mechanic whose primary job is to support an auto club’s breakdown service.

Grey areas

The examples that the regulator gives are mostly the easy ones which fall neatly on one side or other of the boundary. It’s the ones in the grey area that are going to cause the headaches. And that’s why we’re asking the question.

A closer look

Go back and look at the factors that the Victorian regulator identified.

Now imagine that:

  • the auto club provides a 24/7 roadside assistance service for its members (and for members of the public who sign up on a call-out);
  • the club employs its own workers to provide the service in metropolitan areas and during certain hours;
  • the motor mechanic’s business is contracted to provide a “seamless” service to the club to supplement the club’s service and to extend its coverage into areas, and at times, when the club’s own employees aren’t operating;
  • the club allocates an exclusive territory to the mechanic for the purpose of the club’s service; but, from time to time, the mechanic is required to extend service into another territory controlled by the club or to work alongside the club’s own employees – e.g. in order to meet response times during periods of peak demand, or to provide back-up in the club’s areas and during its operating hours;
  • the club requires the mechanic’s vehicles that are used in providing the roadside assistance service to be liveried exclusively in the club’s colours, and may even restrict their use for other purposes;
  • the club requires the mechanic’s staff to wear club uniforms when attending roadside callouts;
  • the club requires the mechanic’s staff to promote club services and authorises them to sign up motorists to club membership and other club services;
  • the club requires the mechanic’s vehicles to stock specified parts or parts that are supplied by the club’s preferred suppliers;
  • the club requires the work to be completed according to KPIs and procedures set by the club;
  • the club operates a complaints handling process and can arbitrate disputes that arise between the mechanic and motorist out of club-authorised services provided by the motor mechanic.

If you’re an auto club or a motor mechanic who’s contracted to an auto club or a roadside assistance service, you probably understand the detail of those arrangements far better than I do. You can likely say whether the scenario I’ve painted is realistic.

Breakdown!

But here’s the question: Keeping in mind that “no one factor is definitive” and “looking at the engagement as a whole”, what would the regulator say about whether the motor mechanic needs a labour hire licence in that scenario. What would it say about whether the club should only be dealing with licensed labour hire providers?

And if all it’s got to say is that it doesn’t give legal or business advice, then that’s not likely to be good enough.

If you apply the tests yourself and the answer you get is “maybe”, “possibly”, or “probably”, what are you going to do?

Safe options?

The safe options would seem to be to apply for a licence and/or change the basis of your service. But you’ll need to be quick. The scheme is already running in Queensland, and the prohibitions against unlicensed dealing will kick in for Victoria on 30 October 2019 and for South Australia on 1 November 2019.

If you’ve applied for a licence before the cut-off date (or if your provider has applied for a licence before the cut-off date), you might be able to continue to provide services until the licence application has been decided.

South Australia – Good sense starting to show

If you’re wondering about how this works in South Australia, you might be encouraged to learn that South Australia has a very sensible exception that applies if the provision of labour-hire services is not a “core function” of the provider.

Unfortunately, there’s not much guidance material to tell you whether the supply of an individual to do work in and as part of the business or commercial undertaking of another person is a “core function” of the provider or not. But the South Australian regulator can move quickly to establish exemptions by Gazettal – and has done so already on several occasions. It may be worthwhile raising the issue through that channel.

One day the courts will tell us

In the meantime, the rest of us will be left with the cost of uncertainty as we wait for a Supreme Court to make the fact-sensitive inquiries that are needed to tell us what the legislation means and how it applies in grey areas into which the regulators haven’t dared to venture …yet.

And let’s hope we can avoid a breakdown.

 

Andrew C. Wood

 

[1] Queensland, South Australia and Victoria.

[2] 29th October 2019.

[3] Tip: MAke sure you read and compare all the scenarios. If you get it wrong, there are hefty fines. If you get it wrong in Qld or SA, there are hefty fines and prison sentences – though you’d be very unlucky to receive a large fine or prison sentence for an honest mistake. The Qld regulator, sensibly, seems to have adopted the practice of issuing warnings before prosecution.

[4] Even though the legislation expressly says that it doesn’t matter who controls performance the work.

Qld Labour Hire Licence Prosecutions – the Trifecta

Strawberry Harvest in Central California

In the latest prosecution under Queensland’s Labour Hire Licensing Act 2017:

  • a corporate labour hire provider was fined $75,000 for operating without a licence;
  • its sole director was fined $25,000 – with 180 days imprisonment in default of payment – for counselling, procuring or aiding the commission of the offence; and
  • the client who was involved was fined $50,000 for entering into an arrangement with the unlicensed provider to be supplied with farmworkers.

You can read more details in the Regulator’s media release.

This “trifecta” of prosecutions, with all three involved parties receiving fines, confirms that suppliers and users of labour hire services cannot afford to disregard the licensing schemes that have now been established in three states.

Whilst the penalties may seem relatively modest, the black marks recorded against the provider and its director will have an adverse impact on their ability to obtain licences in other states and territories.

Queensland, South Australia, and Victoria have all passed labour-hire licensing legislation. The Australian Capital Territory may be the next to do so.

It is understood that the possibility of a national labour-hire licensing scheme is still being considered by the federal government.

Andrew C. Wood

Tuesday TalkAbout: a Free Short Webinar Series

contact-us-hand-speech-bubble-copy-space-picture-id1130100468 (1)

Some of you may know from earlier posts that I’m currently exploring how positive attitudes towards continuing professional development can support recruitment & staffing practitioners in meeting regulatory and industry requirements to acquire and maintain prescribed levels of relevant professional knowledge. It’s part of my response to RCSA’s #loveyourwork initiative.

So, I’ve put together a series of ten short (30-minute) webinars covering topics of importance and interest to members of the RCSA-hosted Labour  Hire Licensing & Regulation (Aust & NZ) LinkedIn Group, which I moderate.

The webinars have been scheduled, at members’ request, to take place at 8.30 am on a Tuesday. The webinars are presented using the ZOOM webinar platform. You can ask questions anonymously or send them to me ahead of the webinar if you like.

Here’s the program. It has been designed to inform and to encourage discussion amongst members who are keen to advance their continuing professional development.

You can register for the free webinars by following the links provided. I hope you’ll take part!

 

2019 Program

15/10/19 Independent Contractors: Removing the Grey Areas (Completed)

Join us for our “Tuesday TalkAbout” webinar when we’ll be shedding light on the topic of independent contracting. What is it, really? How is it different from other work relationships like employment? Why does it matter? Register for the free on-demand webinar here

22/10/19 Labour Hire Licensing: Using Conditions to Get Over the Line (Completed)

We launch a discussion about how to access the regulators’ power to grant conditional licences and examine actual conditions that have been used to support the grant of licences that might otherwise not have been approved.  Register for the free on-demand webinar here

29/10/19 Labour Hire Licensing: Rejections, Appeals & Alternatives (Completed)

Our discussion of labour-hire licencing extends into the area of objections, rejections, appeals, and alternatives. We look at some actual objections, suspensions and cancellations and discuss how to deal with them. Register for the free on-demand webinar here

05/11/19 Service Continuity: Tips & Traps for Agency Work (Completed)

What is the status of your agency workers between assignments?  Can they accrue long service leave and other service-based entitlements when not working? Has the status been affected by recognition of the so-called permanent-casual?  We examine two common models of agency worker engagement and discuss their pros and cons. Register for the free on-demand webinar here

12/11/19 Casual Conversion: How to Use Evidence-Based Responses (Completed)

You will be familiar with casual conversion provisions in awards and agreements. But how do you respond to a casual conversion request? We discuss the type of evidence you can use, how to interpret it, and how you might present it when responding to a casual conversion request. Register for the free on-demand webinar here

19/11/19 Labour Contracting, Supply Chains & Service Networks: Explained

Although it is common to talk about labour supply chains, there are actually very few situations where it occurs. That’s because labour is different from other commodities. We discuss different models of labour contracting and look at examples of recruitment & staffing agency service networks to see what is really going on. Register for this webinar here

26/11/19 Modern Slavery & Vulnerable Worker Protections

How are you going to respond when your clients ask for a report about what steps you’ve been taking to combat modern slavery and the exploitation of vulnerable workers in their supply chains? We build on our understanding of labour contracting, supply chains and service networks to discuss how you can respond positively to your client’s (and regulators’) requirements. Register for this webinar here

03/12/19 Certification Schemes as Regulatory Alternatives: Pros and Cons

Can industry certification schemes be viable alternatives to statutory licensing schemes? We discuss different types of certification schemes and consider their pros and cons as regulatory alternatives. In doing so, we’ll also look at Regulatory Impact Statement that supported the Victorian licensing scheme to see how it worked. What assumptions were made? Were they correct? How might a federal RIS and outcome differ? Register for this webinar here

10/12/19 Freelance Platforms: New Idea or New Technology?

You might have a view about whether freelance platforms present a threat to the industry or whether they are part of the industry. But have you ever looked into their terms and conditions to see how they run and where they fit within the industry? We discuss actual examples of some freelance platform terms and conditions to see how they operate and why they are different from your usual terms and conditions. Register for this webinar here

17/12/19 Piece Rates: Explained

We discuss piece rates under some common awards and consider how to manage risk when applying them. What do courts look for? How can you get that sort of information from your clients? How can you protect yourself against underpayment claims? Register for this webinar here

 

Andrew C Wood Hon FRCSA (Life)

Personal Learning Experiences

This week, as part of a project I’m undertaking in instructional design, I was challenged to describe three personal learning experiences across different stages of my learning journey.

I learned to read in primary school. I was taught by my Grade 1 teacher. She taught us the sounds of letters in the alphabet and then we had to read by making the sounds and forming them into words. We were learning to read so that we could learn many other things.

In high school one of the best teachers I ever had started the year by telling us (a group of very ordinary learners) all that we already knew the answers and that his job was simply to ask us the right questions. I think it was his belief in us that encouraged us to achieve outstanding results by the end of the year. That lesson has stayed with me.

At uni, I studied law and learned a lot of other things!. We were taught by lecturers and tutors, but much of our learning was self-directed through research, discussion and debate. We were learning the theory, content. and practice of law. We were also learning about its culture and ideology – although ideology was never openly discussed. I learned about that later as a post-graduate student! We were learning so that we could practise law in the real world.

Now, I am about to embark on a course of learning in a post-professional setting about climate science.  The course is being taught as a MOOC with an emphasis on the social and collaborative aspects of learning. I’m not much of a scientist, but I’m wanting to understand it better and to overcome fear and prejudice about it because it seems to me that fear and prejudice are often major impediments to learning.

Businessman & Newspaper