One of the more intriguing features of the Australian labour hire licensing schemes concerns the definition of a “worker” and the requirement that a person is only a worker for another person (the provider) if the provider is obliged to pay the worker, in whole or part, for the work.[1] Whether such an obligation exists should be relatively easy to determine in most cases. But it will not always be so; and the issue may sometimes be clouded by the involvement of intermediaries.

Take the case of a labour hire agency’s worker who is engaged through a payroll company that provides outsourced “employer-of-record” services. Where does the obligation to pay the worker lie? Is it with the agency or the payroll company? Does a statutory obligation to pay perhaps rest with the agency as the “true employer”[2], whilst a contractual obligation lies with the payroll company?  

You can already see that we are now having to distinguish between contractual and statutory obligations.

If the payroll company is found to be the “true employer”, is the agency necessarily off the hook? What happens if the payroll company fails to pay – perhaps because of insolvency? Could a restitutionary claim against the agency, as someone who has benefited from the work to the extent that it was paid by the host for supplying the worker – give rise to an equitable obligation on the part of the agency to pay the worker? Would the obligation be to pay “in whole or in part for the work”? What questions of characterisation arise? And to what extent are those questions resolved by the express legislative provisions in South Australia, Victoria and the ACT, but not in Queensland, that the obligation may arise “directly or indirectly”?

So far, we have distinguished between contractual, statutory, and equitable obligations to pay.

Next, take the case of an agency worker who operates through a family company that is the trustee of a discretionary trust which receives payment for the supply of the worker. The trustee may be under no obligation at all to pay the worker; and any distribution under the trust, being an exercise of discretion, might not be able to be characterised as being “in whole or in part for the work”.

As I say, these are intriguing questions – at least for some! They were not answered when the legislation was being drafted. And whilst they may seem highly technical, success and failure in prosecutions and civil actions may well depend upon the answers that the courts will eventually have to provide.  

Andrew C. Wood

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[1] Labour Hire Licensing Act 2017 (Qld) s. 8(1)(b), Labour Hire Licensing Act 2017 (SA). s. 8(1)(b), Labour Hire Licensing Act 2018 (Vic) s. 9(1)(b), Labour Hire Licensing Act 2020 (ACT) s. 8(1)(b).

[2] For discussion of the distinction between an “employer-of-record” the “true employer” see Gothard (recs & mgrs of AFG Pty Ltd) (in liq) v Davey [2010] FCA 1163; Re Plutus Payroll Australia Pty Ltd (in liq) [2019] NSWSC 1171;and In the matter of Branded Media Holdings Pty Limited (in liquidation); In the matter of Brand New Media Pty Limited (subject to a Deed of Company Arrangement) [2020] NSWSC 557.