The Recruiters’ Casebook Labour Hire Posts

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If you’ve been following any of my commentary on labour hire licensing & regulation, you might like to know that I’ve finally compiled a list of links to posts, which you can access via The Recruiters’ Casebook Explorations page.

It was fascinating to go back over my posts since 2015 and read again what I had written. Some of it strikes me as being overly fearful – or at least some of my dire predictions haven’t come true … yet!

Some of it might still even be valid. I’ll leave you to work that out.

Anyway, I hope you enjoy the trip down Memory Lane and get something out of it – at least you might be able to see how The Recruiters’ Casebook commentary about labour hire licensing has evolved.

Andrew C. Wood

Labour Hire Intermediaries: What are they? (Part 1)

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Abstract

In this post we continue our exploration of intermediaries under the Australian labour hire schemes. We analyse legislative references to intermediaries in the key definitional provisions relating to labour hire providers and workers and identify three different type of arrangements in which intermediaries may be found. We suggest that intermediaries may be categorised as supply intermediaries; recruitment/ placement intermediaries; and payment intermediaries.

The conversation so far…

I’ve been enjoying our conversation about the position of labour hire intermediaries under the four current Australian labour hire schemes.

In the prologue to the conversation, last week, I set out 12 reasons for taking a closer look at the difference between labour hire providers who need licences and mere intermediaries who don’t. Among the reasons, I included the lack of definitions and clear guidance. Charles Cameron, CEO of RCSA, brought an additional perspective when he commented:

“…the capacity of regulators to simply define the modern labour market is greatly constrained.”

There’s perhaps a reason for that, and it might be that regulatory understandings of labour hire have not kept pace with the way recruitment and staffing firms have responded to change, continually innovating new ways of doing things and new specialisations, to improve the effective operation of the labour market.

In our first exploration of the topic, I offered a description in under 100 words of the four current Australian labour hire licensing schemes and observed that:

Typically, an intermediary is positioned in the arrangement between:

– a provider and a host; or

– a provider and its workers

but is not a provider itself.

Intermediary service network roles facilitate the supply of a labour hire service. They include roles such as sourcing & screening, contractor management, accommodation provision, and payroll.

Ian Lindgren’s feedback was insightful. Ian argued that it would be difficult to achieve clarity on this topic until:

…the definitions of the entities that form the “intermediaries” are universally accepted throughout the industry to the same degree as Provider, Host and Hirer.

So, in this post we’ll have a look at what the Acts actually say on the topic of intermediaries. Fair warniing, though, it’s not much!

“The Regardlesses”

It sounds like it could be a good name for an indie rock band. But they’re actually a set of provisions that have been inserted into each of the four state and territory labour hire licensing acts to expand their scope and as an anti-avoidance measure targeting sophisticated, multi-party and tiered arrangements that utilize intermediaries to create a buffer between provider and host, or between provider and worker.

They’re not identical across the four licensing schemes. So, I’ve simplified them a bit for the sake of representing them in the following table.

Table 1

You’ll see that the intermediaries are positioned, in these provisions, specifically in relation to the supply (Qld, SA, Vic & SA), and the recruitment/ placement (Vic) of an individual who is a worker as defined for each different type of provider.

A bit of a tangle

Taken individually, “the regardlesses” appear to make some sense. It should not matter whether the worker is an employee or an independent contractor (assuming the distinctions still hold good after the High Court hands down its decisions in two cases currently before it).

It should not matter if the work is performed under the control of the host or someone whom the host appoints to control the work (assuming that control is (and remains) one of the distinguishing features of an employment relationship).

It should not matter whether the workers are recruited, placed or supplied directly by their provider or through tiered arrangements.

But taken together, they create a tangle because a labour hire provider may be a party to a non-contractual, indirect arrangement for the performance of work that could be under the control of anybody or nobody at all.  In the midst of that tangle, it can be difficult to distinguish providers from intermediaries.

One sure thread

Our one sure thread is that intermediaries do not have workers. Only providers have workers. So who is a worker?

Who is a “worker”?

In the table below, I’ve set out the distinguishing features of the provider/ worker relationship in each of the four licensing jurisdictions. 

You will see that there are three different types of arrangement. Note their differences. Can you also see why in our October 1st post, we suggested that good governance of labour hire workforce arrangements has to start with a clear and detailed understanding of:

  • what everyone is doing; and
  • the source of their obligations and responsibilities?

Table 2

Some of you will have noticed that I left out the various statutory, regulatory and declaratory exceptions.  That’s a topic that we can save for a different discussion.

Take Away Lesson

When the positioning of the intermediaries is presented in this way, I think we can start to see that they can be classified into three groups. Note where the obligation to pay the worker falls for each group:

  • supply arrangements (provider has obligation)
  • accommodation/ recruitment arrangements (host/client has obligation)
  • contractor management/ recruitment arrangements (anyone can have the obligation).

Also note that three of the schemes (S.A.; Vic and A.C.T.) contemplate that payment to the worker can be made directly or indirectly through intermediaries. But it must always be an obligation to pay for the work (either in whole or in part). That is quite possibly the case in Queensland as well; but it is not expressly stated.

There may be cases where a worker is rewarded for their effort otherwise than being paid for the work. They might, for example, be rewarded by payment of directors’ fees, distribution of share dividends, or a trust distribution under their own company and trust arrangements. It might be difficult to say that being rewarded in that fashion is payment for the work or that it is any part of the arrangement made with the provider.

I think we can also identify three types of intermediaries from the legislative references:

  • supply intermediaries
  • recruitment/ placement intermediaries
  • payment intermediaries.

Next Steps

In our next post, we’ll continue our examination of the position of intermediaries by looking in more detail at the three types of intermediaries. We’ll try to develop a sense of what they are typically doing and what distinguishes them from providers. We’ll also discuss some of the more challenging arrangements, where staffing agencies may be performing mixed functions.

Meanwhile, if you’d like to join the conversation, head across to the RCSA-hosted Labour Hire Licensing & Regulation (Aust & N.Z.) LinkedIn Group, where I’ll be moderating discussion. Alternatively, you can post a reply here or on my blog, The Recruiters’ Casebook.

Let’s talk soon.

Andrew C. Wood

Australian Labour Hire Licensing in under 100 Words

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This is the first of our October posts in which we’ll try to untangle the distinction between labour hire providers who need licences and intermediaries who don’t.

The distinction is complex. There’s no way of avoiding that.  But it helps if we have a base template that we can use to organize and interpret the similarities, differences and subtleties of the four schemes we are considering.

The Base Template

My challenge is to describe as much of the four state and territory licensing schemes as I can and as accurately as I can in under 100 words.

Here’s my attempt. Note that X is always a provider, and Y is a host or hirer.

Australian labour hire licensing schemes concern arrangements where X supplies, to Y, workers whom X is obliged to pay for the work performed for Y.

South Australia limits the arrangements to prescribed work.

Victoria extends the arrangements: where X is a placement agency that procures accommodation for workers it places with Y and Y must pay them; and where X manages the contract performance of workers whom it recruits, or places with Y, regardless of who pays.

Arrangements between X and Y and between X and its workers need not be contractual and may be made indirectly through intermediaries.

Focus on the Arrangement

The template directs attention to the whole arrangement under which labour hire services are supplied, rather than merely to the narrow transaction between provider and host, or provider and worker. That is useful, when we consider the difference between providers and intermediaries, because the intermediaries stand outside the narrow transaction.

Positioning the Intermediary

Typically, an intermediary is positioned in the arrangement between:

  • a provider and a host; or
  • a provider and its workers

but is not a provider itself.

Intermediary service network roles facilitate the supply of a labour hire service. They include roles such as sourcing & screening, contractor management, accommodation provision, and payroll.

In some cases, which we’ll look at in more detail in later posts, performance of an intermediary role can result in the person who performs it becoming a provider.

Think about the Victorian extensions referred to in our template.

Think about the Queensland provision that exempts suppliers who are merely private employment agents (direct placement agencies).[1]  What if they are doing something more? What if they are handling payroll, resulting in their having an obligation to pay the workers for their work? Does the template help to demonstrate why these questions might be important?

Take Away Lesson No.1

We can say, then, that good governance of labour hire workforce arrangements has to start with a clear and detailed understanding of:

  • what everyone is doing; and
  • the source of their obligations and responsibilities.

We can’t exercise good labour hire workforce governance and we won’t be able to distinguish between providers and intermediaries if we’ve not examined ALL of the contractual and non-contractual aspects of the arrangement under which the workers are supplied or placed in the workforce.

Feedback

What do you think?  What changes would you make to this base template?

I think it’s about three-quarters of the way there.  The missing bits include definitions, exceptions, and deeming provisions. 

We’ll continue to develop this template as we explore its elements in more detail in later posts. Nevertheless, I hope it gives us something to work with and helps to place intermediaries roughly in their correct positions. 

Andrew C. Wood


[1] Labour Hire Licensing Act 2017 (Qld) s. 7(3)(a).

Labour Hire Intermediaries: Untangling a Knotty Topic

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Throughout October, we’re going to untangle what, I think, is one of the most difficult topics in labour hire licensing. It concerns how we distinguish between a labour hire provider who requires a licence and a mere intermediary who doesn’t.

Typically, the topic arises in the context of multi-party service network supply arrangements, where different parties are responsible for sourcing, engaging, supplying, managing, paying or accommodating workers who perform work for a labour hire host.

The topic is difficult because:

  1. There is no consistent definition of what it means to supply a worker.
  2. There is no definition of what an intermediary is.
  3. There is no authoritative decision about what it means to have an obligation to pay a worker in whole or in part for the work – one of the key distinguishing features of a labour hire provider.
  4. The obligation, whatever it is, can arise from an arrangement that doesn’t necessarily have to be a contract, and which may be made indirectly through one or more agents or intermediaries.
  5. Guidance provided by regulators fails to distinguish consistently between labour hire and workforce contracting.
  6. Guidance provided by regulators is sometimes confused about who is the host;
  7. The Victorian extension of the licensing requirements to accommodation providers who recruit workers (e.g. backpacker hostels who recruit workers for local employers) and to contractor management services providers who also recruit workers add further layers of complexity and confusion.
  8. The Victorian provisions, which deem certain beneficiaries of the work performed by some classes of workers (e.g. commercial premises receiving cleaning services) to be hosts, creates adds to the confusion about who is exercising what role in a service network.
  9. There can be uncertainty, once various deeming provisions and exceptions are taken into account, about whether there can be more than one labour hire provider in respect of the same worker.
  10. Intermediaries, to the extent to which they become involved in labour hire arrangements, may have obligations to ensure labour hire providers (wherever they are located in the supply network) are properly licensed and may be obliged to pass on licensing information to ensure that neither the intermediaries nor their clients become involved in the unlicensed supply of labour hire services;
  11. The extraterritorial operation of the various labour hire acts will often mean that where the issue arises in interstate supple transactions the rules and interpretations of more than one jurisdiction will need to be considered;
  12. The problem, to the extent to which it arises under labour hire licensing laws in Qld, S.A., Vic or the A.C.T., may intersect with additional private employment agency licensing laws in S.A., W.A., and the A.C.T., and with private employment agency regulation in Qld – triggering either exemptions or requirements for dual licensing.

There’s enough there, I think, to keep us occupied while we attempt to untangle these problems in small steps and arrive at some answers that might help smooth the way to more certain and effective supply arrangements. 

So, if you’d like to join the conversation, head across to the RCSA-hosted Labour Hire Licensing & Regulation (Aust & N.Z.) LinkedIn Group, where I’ll be moderating discussion. Alternatively, you can post a reply here or on my blog, The Recruiters’ Casebook.

Let’s talk soon!

Andrew C. Wood

Independent Contractor Characterization Hangs in the Balance

Back in April, I reported on two cases presently before the High Court, which have put the spotlight back on the distinction between employment and independent contracting. Since then, the High Court in Rossato[1] has questioned the extent to which the characterisation of a work relationship can be determined by anything other than strictly “by reference to the legal rights and obligations which constitute that relationship”.

The High Court preferred to rely on the contract to determine whether any “firm advance commitment” had been made for the purpose of deciding if work was casual, rather than characterising the relationship according to a sense of its “practical reality” gained from consideration of “all the circumstances”.

Notwithstanding that Rossato was not a case about the distinction between employment and independent contracting, its effect seems to have spilled over into the Fair Work Commission, with the Full Bench deciding, on 13 August 2021, to put the case of Deliveroo Australia Pty Ltd v Diego Franco [2021] FWCFB 5015 on hold until the two cases presently before the High Court that do concern the distinction between employment and independent contracting have been decided.

Although submissions have been filed in both High Court cases, a decision might be some months away. In the meantime, the status of some platform workers, whose contracts state that they are “independent contractors” will remain uncertain.

Andrew C. Wood


[1] WorkPac Pty Ltd v Rossato [2021] HCA 23.

ACCC Class Exemption for Small Business Collective Bargaining Starts Tomorrow

Photo by Anna Shvets on Pexels.com work desk showing people’s hands and notes as they negotiate a deal

The ACCC’s small business collective bargaining class exemption, which has been coming for some time, is now set to start on 3 June 2021.

The exemption makes it lawful for some small businesses to engage in collective commercial bargaining without contravening Australian competition laws.

It will be interesting to see what use staffing agencies are able to make of it in banding together to negotiate with customers and suppliers. If you are an on-hire agency, your independent contractors may also be able to band together to negotiate with you.

Other applications might permit some platform workers to band together to negotiate with their platform controller.

Be careful, though. There are some limits that you will need to stay within and there is a notification process.

Have a read of the determination and share your thoughts? What uses do you see for the new exemption?

Andrew C. Wood

ACT Notifies Labour Hire Licensing Regulation 2021 … finally!

Mere days before the scheduled commencement of the ACT’s Labour Hire Licensing Scheme, the regulations have finally been notified. Unlike the regulations in other states, they don’t set out exemptions or fees.

For the exemptions, you have to go to the Labour Hire Licensing(Exempt Workers) Declaration 2021 (No1). Does that sound like there might be more? That’s hard to say.

But for starters. the following are not “workers”:

·        public servants;

·        high income workers provided that they’re not covered by an award of enterprise agreement under the FWA;

·        in-house employees on secondment;

·        internal labour-hire employees working within a group of related entities;

·        employed directors and senior managers of corporations with no more than two directors provided that the director or senior manager is the only person who is supplied by the corporation to undertake work for another person.

There are definitions that refine some of these exceptions.

For the fees, you have to go to the Labour Hire Licensing (Fee) Determination 2021 (No 1). Could be more of those too!

The application fee under s. 24 of the Act is $2,900. But keep in mind that there may also be a licence fee if a licence is  ssued. There will probably be questions. But it’s a start.

Andrew C. Wood

Not Quite the Registration Scheme the Aged Care Royal Commission Recommended for Personal Care Workers

Cut out paper people in a pair of hands

The Australian Government’s response to the recommendations of the Royal Commission into Aged Care Quality and Safety has accepted most of the recommendations in the Commisison’s final report delivered in March this year.

Last night’s budget and supporting measures forecast that changes are afoot, with a promised review of the Aged Care Quality Standards to consider “appropriate regulatory levers to require providers to ensure staff are appropriately trained.”

Recommendation 77

Back in March, 2021 the Aged Care Royal Commission delivered its final report into the Australian Aged Care system and recommended a registration scheme for the personal care workforce that was to include:

  • a mandatory minimum qualification of a Certificate III
  • ongoing training requirements
  • minimum levels of English language proficiency
  • criminal history screening requirements
  • a code of conduct and power for a registering body to investigate complaints into breaches of the Code of Conduct and take appropriate disciplinary action.

Commissioner Briggs additionally recommended that the government consider whether registration should be established under the National Registration & Accreditation Scheme (“NRAS”).

Government Response

Although the government has accepted Recommendation 77 “in principle”, it has determined not to establish the scheme under the NRAS due to concerns that the “NRAS requirements would be disproportionately burdensome for personal care workers and present a significant ongoing cost.”[1]

Nevertheless, it has agreed:

  • to establish a single care and support sector code of conduct (Code) across the aged care, veterans’ care and disability support sectors for implementation by 1 July 2022; and
  • to deliver a nationally-consistent centralised pre-employment screening check with a register of cleared and excluded workers, in the aged and veterans’ care sectors, commencing 1 July 2022.

To that end, the government has included, in its latest budget, provision of $105.6 million to introduce the code of conduct, screening check and register.[2]

Workforce Development

The government additionally accepted:

  • Recommendation 80 – Dementia and palliative training for all workers; and
  • Recommendation 81- Ongoing professional development for the aged care workforce.

It has indicated that it will respond to aged care workforce development needs through its Growing a skilled, high-quality workforce to care for older Australians measure and will invest $338.5 million over 3 years “to grow, train and upskill the aged care workforce to drive improvements to the safety and quality of care”.[3]

So, the clock is now ticking and there is just a little over twelve months to see what the changes will mean for recruitment and staffing services in the agency sector.

Andrew C. Wood


[1] Australian Government Response to the Final Report of the Royal Commission I=into Aged Care Quality and Safety (11 May 2021) at p.51. https://www.health.gov.au/resources/publications/australian-government-response-to-the-final-report-of-the-royal-commission-into-aged-care-quality-and-safety accessed 12 May 2021.

[2] Budget Paper No. 2, Budget Measures 2021-22 (11 May 2021) at p.125.  https://budget.gov.au/2021-22/content/bp2/download/bp2_2021-22.pdf accessed 12 May 2021.

[3]Workforce (Pillar 4 of the Royal Commission response) – Growing a skilled and high quality workforce to care for senior Australians (11 May 2021) https://www.health.gov.au/sites/default/files/documents/2021/05/workforce-pillar-4-of-the-royal-commission-response-growing-a-skilled-and-high-quality-workforce-to-care-for-senior-australians.pdf accessed 12 May 2021.

Telstra Group Describes Textbook Example of How to Use Leverage to Remediate Modern Slavery Risks

Photo by cottonbro on Pexels.com Hands shuffling bank notes on a table.

If you have the time to do it, browsing through the 2,000 plus modern slavery statements published to date on the Australian Register can yield huge dividends in terms of discovering how others identify and remediate risks of modern slavery in their supply chains.

If you don’t have time to do it, The Recruiters’ Casebook will try to bring you examples that recruitment and staffing firms would do well to note.

Here’s a textbook example of how Telstra Group used its leverage to address risks which it discovered in its supply chain. The Commnwealth’s Guidance for Reporting Entities on the Modern Slavery Act 2018 (p.51) explains that “Leverage means your ability to influence the other entities to change their behavior.”

Pay special attention to:

  • how the risk was identified
  • what the risk was
  • what justification the supplier put forward
  • why Telstra Group considered the practice was unacceptable
  • what Telstra Group did about it
  • how the supplier responded
  • what the subsequent outcome has been.

Telstra engaged an independent third party to conduct site audits of one of our suppliers’ labour practices. The audit revealed evidence of practices resembling debt bondage in their Hyderabad operations in India. Under the arrangements, employees were bound to repay training costs incurred as part of their recruitment. While the supplier asserted such practices were both common and legal in India, we took the view that it was not acceptable and in breach of our Supplier Code of Conduct.

We wrote to the supplier and asked them to remove this bond immediately for all employees delivering services to Telstra and all new hires. The supplier agreed to this request.

We also asked that the bond be removed for all other employees of the supplier including those who do not perform Telstra work. The supplier agreed not to take any action to enforce the service bond provisions under existing employment contracts and to issue all employees with new contracts that do not contain service bond provisions. A follow-up audit found the changes we requested had been implemented. We were also pleased to see evidence that throughout the COVID-19 pandemic, the supplier has continued to pay all employees 100 per cent of their wages.

Telstra Group Modern Australian Slavery Statement published 13 April 2021 https://modernslaveryregister.gov.au/statements/2899/

“Debt Bondage”

In this example, Telstra Group is only saying that the supplier’s practise resembled debt bondage.

The Commonwealth’s Guidance for Reporting Entities on the Modern Slavery Act 2018 (p.78) explains that “debt bondage” occurs “where the victim’s services are pledged as security for a debt and the debt is manifestly excessive or the victim’s services are not applied to liquidate the debt, or the length and nature of the services are not limited and defined.”

Nevertheless, Telstra was sufficiently concerned about the practice to do something about it – and without getting involved in technical legal arguments about definitions.

The outcome shows what can be achieved when all parties co-operate to remediate practices that may have adverse impacts on workers and which may be questionable under values and principles of good workforce governance and supply chain stewardship.

What would you have done if you had discovered the practice or something similar in your supply chain or service network?

Andrew C. Wood

“Modern Slavery Clauses”: the Good, the Bad and the Downright Dangerous.

Photo by Travis Saylor on Pexels.com Metal gate chained up and locked.

Browse through the 2,000 plus modern slavery statements published to date on the Australian register. You might see that there has been considerable interest in the use of “modern slavery clauses”. These clauses aim to remediate risks that are caused or contributed to by reporting entities or to which they are directly linked through their operations or supply chains. 

Although such clauses can help remediate risks and create a solid foundation for cooperation between suppliers and their customers, some caution is still needed.  That’s because the quality of the modern slavery clauses that have been described in the published statements ranges from well-tempered to confused to downright dangerous.

How do you tell the difference? You need to start with a clear understanding of what prohibitions exist and what Australia’s Modern Slavery Act requires.

Distinguishing good from bad

Did you know that the Act doesn’t actually prohibit modern slavery? That’s done by the criminal law.

Did you know that the Act doesn’t actually require you to eliminate modern slavery from your supply chains? It only requires some entities to report on the risks of modern slavery in their operations and supply chains and actions to address those risks.

Now think about some of the modern slavery clauses you might have seen:

  • the ones that reference so-called “duties of care” supposedly set out in the Act;
  • the cut-and paste ones that require you to warrant that your supply chain is free from slavery, servitude, forced or compulsory labour and human trafficking as defined by the Modern Slavery Act 2015; [1]
  • the ones that require you to comply with all your legal obligations, including WHS, but which forget to say anything meaningful about modern slavery and the Criminal Code;
  • the ones that require you to warrant that you will comply with all rules or international treaties signed by any government authority in relation to corporate social responsibility; but which fail to appreciate that, under our law, those rules only become binding in Australia once they are passed into domestic legislation – and they are often passed into domestic legislation subject to reservations or variations;
  • the ones that include indemnities and hold-harmless provisions.

There are plenty of other examples of poorly constructed clauses out there!

Consequences of breach

Have you ever thought about what the consequences of a breach of these clauses might be? Can your customer refuse your claims for payment? Can you customer terminate your supply agreements? Have you even supplied what you agreed to supply (e.g., services free from any connection to forms of modern slavery through your operations or supply chains)? Can your customer sue you for damages?

Poorly designed modern slavery clauses do nothing to address modern slavery risks. They attempt to shift the burden of compliance in one direction. In doing so, they provide false comfort to parties who rely on them. They add unnecessary costs to transactions in which they are deployed.

A better approach

So, learn how to identify them. Explain to your customers why you can’t or won’t sign them, and help your customers to understand the important contribution that you can both make to combatting modern slavery, not only through well designed modern slavery clauses, but more importantly, through well-designed workforce governance controls and practices

Andrew C. Wood


[1] The MSA 2015 is actually and Act of the UK Parliament! The Australian MSA (Modern Slavery Act 2018 (C’th) doesn’t actually define these terms. They’re defined in the Criminal Code. “Modern Slavery” is given an extended meaning in the MSA (C’th).