The Labour Hire Licensing Act 2020 (ACT) – More variations on a theme

The Australian Capital Territory has made good its intention to enact labour hire licensing legislation. This is the fourth Australian jurisdiction to enact a licensing scheme – if you count South Australia, which has just started to wind the coverage of its scheme back to imit its application tohigh-risk sectors.

So, what’s the deal in the ACT? You can spend hours on this stuff and still not know what it all means until the courts start to interpret it. But here are a few features you might want to note that give the ACT scheme its own unique character.

Status

Early days. We still need to see the regulations and application forms, which will add layers of detail.

Commencement

Probably 1 January 2021, with a 6-month transition period.

Objects

  • Protect workers from exploitation by providers of labour hire services; and
  • Ensure labour hire service providers meet their workplace obligations and responsibilities to the workers they supply; and
  • Promote the integrity of the labour hire services industry; and
  • Promote responsible practices in the labour hire services industry.

Coverage

You’re a labour hire provider if, in the course of carrying on a business, you supply to another person (the hirer) a worker to do work.

The definition is closer to the very wide Queensland model. There’s no attempt to give meaning to what “supply” means and no use of the complex integration test (to perform work in and as part of the hirer’s business or undertaking) adopted in South Australia and Victoria.

Neither is there any attempt to exclude licensed private employment (placement) agencies (PEAs) as there is in Queensland and South Australia, even though the ACT has a separate PEA licensing scheme.

This will mean that the requirement to hold a licence will often come down to whether the person supplied to do the work is a worker within the meaning of the Act. We’ll look at that in a moment.

Unlike Victoria, there’s no explicit extension of the scheme to PEAs who provide accommodation, or to Contractor Management Services providers. Although, that might be unnecessary in view of the width of the coverage.

The “Regardlesses”

Not an Indie band – but a set of provisions that say you’re a labour hire provider no matter what (regardless).  So, you would need a licence regardless of whether:

  • the worker is employed by you; or
  • there is a contract for the worker to do the work; or
  • the worker is supplied by you directly or indirectly; or
  • the work completed by the worker is under the control of you or the hirer.

All four State and Territory licensing schemes use some version of the regardlesses. They’re designed to extend coverage to tiered supply and contracting chains. They are capable of producing a lot of unintended consequences. You need to do a few worked examples to see what they lead to. But, basically, you can be a labour hire provider even though you’re not engaging the worker. That might cause a few headaches for payroll companies.

Regulations can exempt a stated person from coverage meaning that they would not have to have a licence. That’s not as good as it looks. It relates to “stated persons” rather than to classes of persons and it falls well short of anything you might have heard to the contrary about the Minister or the Commissioner having a power to declare exemptions.

Who is a “worker”?

Only an individual can be a worker. An individual is a worker for a provider if the individual enters into an arrangement with the provider under which—

  • the provider may supply, to another person, the individual to do work; and
  • the provider is obliged to pay the worker for the work—
    • in whole or part; or
    • directly or indirectly.

This definition is also pretty standard across the four licensing schemes. But it’s riddled with problems because there’s no clarity about the nature of the “obligation”. It’s easy enough if the obligation arises directly from a work/wages bargain.

But things get complicated if the obligation arises from an escrow obligation such as you might see with some of the freelancing platforms, or if the worker is not paid for the work but receives distributions from a trust or is remunerated in some other manner.

Also, keep in mind that a person can be your worker, even though you’ve not engaged them. Again, this could cause some headaches for payroll companies and contractor management services providers.

The Minister can declare that a person is or is not a worker. This is a bit easier than the power to exempt a provider by regulation. Still, it’s not an easy path and I doubt that we’ll see anything like the liberal application of the similar power to exempt by gazettal, which we saw in South Australia before the Act there was changed.

The Offences

  • Supplying a worker without having a labour hire licence – huge fine 3,000 penalty units for a corporation; 800 penalty units for an individual
  • False representation that a licence is held – 200 penalty units
  • Breach of licence condition – 300 penalty units
  • Entering into an arrangement to acquire services from an unlicensed provider – huge fine 3,000 penalty units for a corporation; 800 for an individual

Ignorance might actually be an excuse in the ACT – Consider “Kevin”.

If you’re a hirer (host) you won’t commit the offence of entering into an arrangement with an unlicensed provider if you had a reasonable excuse. Consider this example of a reasonable excuse included in the Act:

Kevin decides that he needs a cleaner for his house. He sees an advertisement on a social media site by a company offering domestic cleaning services. Kevin did not know that the company was an unlicensed labour hire services provider nor was there anything in the advertisement or otherwise to make him aware that he should check that the company was licensed.

That’s going to raise a lot of questions about what you should and shouldn’t know about the scheme. You might get away with it if you’re a householder, like “Kevin”; but my guess is that you wouldn’t want to be putting your eggs in that particular basket if you’re a business acquirer of labour hire services.

Where is the anti-avoidance measure?

It seems like a curious omission, but I can’t I can’t find an express anti-avoidance measure. I’d be interested to learn why, if anyone knows the reason. The last thing you’d want is a scheme that is tolerant of a certain degree of contrived ignorance! Maybe there’ll be some attempt to fix it in the regulations.

Fit and proper person test

A version of the now familiar fit and proper person test applies to all “influential” people for a provider. Influential people for a corporation include a person who can exercise a power to:

  • take part in a directorial, managerial or executive decision for the corporation; or
  • elect or appoint a person as an executive officer in the corporation; or
  • significantly influence the conduct of the corporation.

Think about that last point for a moment. Who could that include? Your significant shareholders? Your financiers? Your industry association? Your suppliers? Your clients? Your spiritual advisors?

It’s a pretty wide category and it’s going to take a fair bit of common sense to know where to draw the boundaries. And, of course, there’ll be outliers.

The rest of it

As to the rest of it, there’s a lot of administrative provisions about applications, licence onditions, enforcement, inspectors, appeals, the establishment of a Commission and an Advisory Committee.

You can read a copy of the Act for yourself here.

Treat it as a broad framework and expect more detail  – including information about fees – in the regulations when they become available. There’s still a bit of work to be done before we know how this scheme will actually work.

Andrew C. Wood

 

 

 

 

 

 

Last Chance before Victorian Labour Hire Licencing Barrier Goes Up

LAsd day keep outWith almost 4,000 unprocessed licence applications back-logged in the system and the Victorian Labour Hire Authority processing them at a rate of no more than about 300 per month, it’s going to be a long time before there are any new entrants to the Victorian labour hire market!

So, if you’re planning on operating within the Victorian licensing catchment (and it’s not restricted to the state of Victoria!) any time in the next 18 months, it might be prudent to get your application lodged before midnight on 31 December 2019.

it looks like plenty of providers are taking advantage of the Authority’s extended grace period.

A couple of chores before 2020 arrives…

Time is ticking

Before you knock off to blow the party whistles for the arrival of 2020… please do take a moment to check if you need to have a Corporations Act whistleblower policy in place, and if you (or your labour hire suppliers) need to have lodged an application for a Victorian labour hire licence within the extended grace period.

With that out of the way, may we wish you a happy and safe new year and a fabulous 2020!

Industry Certification Schemes – Regulatory Alternatives?

TT_8 Cwertification Full

Can industry certification schemes be viable alternatives to statutory licensing schemes?

In WorkAccord’s next free Tuesday TalkAbout I’ll discuss different types of certification schemes and consider their pros and cons as regulatory alternatives. In doing so, I’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?

I hope you’ll join me.

Andrew C. Wood

 

Labour Hire Licensing Laws: Do they apply outside their home states?

ExtraterritorialityQueensland, South Australia, and Victoria have now all passed separate labour hire licensing laws[1].

All three acts contain provisions that attempt to extend their application beyond state boundaries.[2] The exact wording in each case is different but basically, they attempt to extend the laws to the maximum extent of the legislative power of their respective Parliaments. No one knows for sure exactly what that is because it hasn’t been tested in this context. But it seems generally correct to say that, provided there is some real connection (or nexus), with the home state, the laws are capable of applying in some other state (or country). Continue reading

Do Victoria’s Christmas Talent Agencies and Incorporated Christmas Talent Need Labour Hire Licences?

This Article May Contain Sensitive Material

For any youthful readers of this piece, let me start by saying that we all know that the real Father Christmas lives at the North Pole with Mother Christmas, the Pixies, Rudolph and the other reindeer.

And we all know that all the friendly people who run around in costume – the Santas, Mothers Christmas (I hope that’s the correct plural), the Pixies, the Wise Persons, Shepherds, Angels, and pantomime camels – let’s call them the Christmas Talent – are just helping out. It could be a franchise, I’m not sure. I haven’t looked at it.

At least, I hope we all know that Christmas Talent is mostly pretend. Nevertheless, it’s always fun to see them because we know that when they start popping up in the stores, Christmas is not too far away.

I’m Concerned

Now here’s my concern.

Up until now, a lot of the Christmas Talent have been sourced through talent agencies. Up until now, that’s not been a problem in Victoria – but now it might be.

It might be a problem because if you’re supplying workers (let’s say Christmas Talent) to another person (let’s say a department store) to perform work in and as part of the store’s business or undertaking (seems likely), then you might need a labour hire licence.

This test is sometimes called an “integration test”. It’s not easy to apply, and it can depend on subtle, fact-sensitive inquiries that can only be determined authoritatively by a court. It can also have some pretty unexpected results.

Queensland & South Australia

Queensland and South Australia got this right because in those States talent agencies are subject to private employment agency regulation in addition to labour hire licensing.

So, Queensland and South Australia both created an exemption from the need to have a labour hire licence if you are acting solely as a private employment agency.[1]

Victoria

But there’s no similar exemption in Victoria. So, if you’re supplying a worker to do work in and as part of another person’s business or undertaking, you’ll possibly need a licence (unless you can bring yourself within one of the other exceptions).

Also in Victoria, if you’re sourcing and placing workers (let’s say Christmas Talent) with clients who are engaging them directly as independent contractors, and you continue to handle payroll or other aspects of the placement administration, you’ll possibly need a licence (unless you can bring yourself within one of the other exceptions).

Incorporated Christmas Talent

It gets even more complicated if your Christmas Talent is self-incorporated – i.e. they’re working through their own small company. That’s because their own small company is supplying the individuals who perform the work and therefore needs to hold a licence in its own right (unless it can bring itself within one of the exceptions).

Fortunately, there is an exception for small companies that have no more than two directors and only supply their directors who participate in management or share in the profits.

But that exception will only go so far. An exempt company couldn’t supply say, Three Wise Men – apart from whatever difficulties they might have in sourcing three wise men (old joke). Two would be OK provided they were both directors who participated in management or shared in the profits.

Likewise, a pantomime camel needs two people (front end and back end). That would be OK provided both ends were directors who participated in management or shared in the profits. But if one end gets sick – they’re going to end up with a two-legged camel unless they’ve got a labour hire licence. That’s because substitution requires a third person.

Same deal with Rudolph. And if you’re thinking of hiring the Von Trapp Family Carol Singers – better check their labour hire licence unless they’re incorporated and you’re only wanting two of them!

Although there’s an exemption for incorporated workers, it doesn’t extend to family partnerships or other unincorporated business structures.[2]

Call Me a Grinch!

I could go on… But you’ll have the gist of it by now, and you can perhaps see the problem that arises when labour-hire licensing is introduced on a universal coverage basis without being targeted to the sectors where it’s really needed.

Did anyone think this would be an outcome when the scheme was proposed? Of course, they didn’t. The States were urged to adopt targeted schemes. The Victorian Forsyth Inquiry even recommended it.  But those urgings and recommendations were mostly ignored.

So if you’re hiring Christmas Talent in Victoria this year or if you’re working as Incorporated Christmas Talent, whatever other checks you do, be sure to check that any necessary labour hire licence issues are covered.

Boy Riding Camel

 

 

 

Andrew C. Wood

 

 

[1] It can get tricky if you’re doing more than acting purely as a private employment agency – say handling payroll or administration.

[2] South Australia fixed this up by Gazettal on 26 September 2019. Although the exemption is still limited to a maximum of two workers.

 

Victorian Labour Hire Scheme: Mopping Up

Close up 0370Victoria’s labour hire licensing scheme is fully up and running – though perhaps stumbling forwards might be a better description.

After 6 months only about 380 licences have been granted, with another 50 or so granted subject to payment of fees.

There are more than 3,700 unprocessed applications. They are still coming in despite missing the cut-off date. If you’re in that long queue – or having to join it because you’ve decided you’d like to extend your labour hire business to Victoria – it could be as much as 12 months before you hear the outcome of your application.

Near-Misses

One of the things that did surprise me was the fact that 200 or so applicants missed the cut-off last week by only a matter of days – even hours in some cases.

Cleaning firms seemed to be strongly represented amongst the near-misses, perhaps because of uncertainty about how the complex integration test and deemed worker provisions applied. Though there were others as well, including general labour hire providers, interstate providers, and at least one legal recruiter.

Misses will hurt

Those near-misses are going to hurt because, unless the applicants can fix something up quickly with the Authority, a miss is as good as a mile.

It’s now an offence under Victorian labour hire licensing laws:

  • to provide labour hire services without a licence
  • to advertise willingness to provide labour hire services if you don’t hold a licence
  • to acquire labour hire services from an unlicensed provider
  • to be involved in avoidance arrangements.

Reaction

So, what’s likely to be happening now?

I suspect that there may be more than a few who have obtained their licences, or got their applications in ahead of the cut-off, who’ll be looking closely at the near-misses and perhaps giving their competitors, or their clients, a cordial “heads up”.

The regulator may be looking as well. If you’ve provided details of your clients and their workplaces, the regulator will know where to find them and might consider giving your clients a cordial reminder that the prohibitions are now in effect.

I suspect that there’ll be a few in the near-miss category, who’ll need to look at their supply arrangements to decide how quickly they can get out of them and if they can get out of them now without penalty.

Clients are likely to be looking at the registers to see which side of the cut-off their suppliers fall on. You might find that they are terminating contracts with unlicensed providers and thinking about what action they can take to recover the cost of entering into new or alternative supply arrangements.

There’ll be workers (and their unions) who’ll be wondering whether they still have jobs, and more than a few clients might be wondering how they can transition supplier arrangements.

There’ll also be more than a few who’ll have to fix up their websites and marketing so that they’re no longer advertising a willingness to provide labour hire services.

Maybe it will settle down eventually, but until then it’s a bit of a mess.  Who knows, perhaps a federal scheme that prevails over state laws with a concerted move to dismantle the systems in the three states that now have labour hire licensing will be all that can clean it up.

 

Andrew C. Wood

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.

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) (Archived)

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?

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

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.  

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

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. 

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

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. 

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

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. 

19/11/19 Labour Contracting, Supply Chains & Service Networks: Explained (Completed) (Archived)

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. 

26/11/19 Modern Slavery & Vulnerable Worker Protections (Completed) (Archived)

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. 

03/12/19 Certification Schemes as Regulatory Alternatives: Pros and Cons (Completed) (Archived)

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? 

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)

Queensland’s High Income Threshold Labour-Hire Exemption: Can You Bank On It?

top view of shattered piggy bank and hammer on rustic wooden tableJust days before its labour-hire licensing scheme was due to start, Queensland finally released its labour-hire licensing regulations. Although it consulted briefly on the content of the regulations, it did not consult widely on the drafting. That was a pity because some agencies are now looking at the regulatory exceptions to the definition of a worker which are set out in regulation 4 and wondering if they are excused from the need to hold a licence.

I wouldn’t want to be banking on that exception. The government’s intent might have been commendable, but its execution raises more questions than it answers. And while the government might not prosecute you (we hope!), failure to obtain a licence if there’s an argument that your workers are excepted, you’ll still be exposed to defences that your more ruthless clients might raise to defeat or delay your payment claims.

The “high-income employee” exception

Let’s break the high-income employee exception down and examine it with some interposed commentary in which I’ll make observations and pose a few questions for you to consider if you’re thinking about relying on this exception. Here it is, taken from regulation 4:

4. Individuals who are not workers—Act , s 8 

  1.  For section 8 (2) of the Act, the following individuals are prescribed—

   (a)  an individual employed by a provider—

The exception relates only to individuals, who are employed by a provider:

  • What if you are on-hiring an incorporated worker – the entity, rather than the individual?
  • What if the individual is employed by someone else and you are merely an intermediary as contemplated by LHLA(Q) s. 7(2)?
  • What if the individual is not employed; but is an independent contractor of yours, or works in some other capacity?

(i)  whose annual wages are equal to or more than the amount of the high-income threshold under the Fair Work Act 2009 (Cwlth), section 333; and

The threshold is set by reference to an amount of annual wages.

There are no pro rating provisions in the Regulations. The Regulations have only borrowed the threshold figure from s.333 of the Fair Work Act. They have not borrowed any of the FWA provisions that apply the threshold to part-time work, or to work for a period of less than a year as a rate of earnings.

In any event, it turns out that wages are different from earnings, which is the expression used for the high-income threshold provisions of the Fair Work Act.

Although the term, annual wages is not defined, the term wages is. It has the meaning given in the Workers’ Compensation and Rehabilitation Act 2003 (Qld).

  • What if your individual worker does not receive wages; but receives a distribution from a discretionary trust or partnership; or directors fees or dividends from an incorporated entity?
  • What if your individual worker receives wages from other employers?
  • Do you have the means to investigate those matters?

Wages and earnings include and exclude different things. For example,

  • wages include overtime payments; earnings don’t – unless the overtime is “guaranteed”.
  • the definitions of wages and earnings are formulated differently with regard to the treatment of superannuation.
  • wages exclude the value of non-monetary benefits; earnings include it.

There are other important disparities between the two expressions.

You might have a worker, who has the benefit of a high-income guarantee under the FWA; but who fails to meet the annual wages threshold under the Regulations; and vice versa.

  • Have you identified all the components of annual wages that need to be taken into account or excluded in order to determine whether the annual wages threshold applies to each of your workers?
  • Can you adjust for any allowances that are not expressly excluded by the Workers’ Compensation and Rehabilitation Act 2003 (Qld)? Do you know what they are?
  • Can you say how the annual wages threshold applies at any given point in time before year-end in relation to:
    • a part-time employee with agreed hours?
    • a part-time employee with no agreed hours?
    • an employee receiving (or entitled to) overtime?
  • Can you make an accurate conversion from the annual wages threshold to the hourly rate you are paying your worker (especially if you have structured it as an all-in rate)?
  • Do you perform your conversion on the basis of a 38 hour week, or on some other basis – e.g. the hours actually worked?
  • How do you account for commissions, incentives, and bonuses (both discretionary and non-discretionary)?

(ii)  other than under an industrial instrument under the Industrial Relations Act 2016 or a modern award or enterprise agreement under the Fair Work Act 2009 (Cwlth).

Employees, who are employed under any of these instruments do not fall within the range of the regulatory exception. So,

  • Does employment in circumstances where a “jump up” clause applies to the employment constitute being employed under such an instrument?
  • Have you accounted for the range of professional awards that may apply to the employment? Some of the Modern Awards for professionals and other high-income occupations or classifications that could bear upon your calculations could be:
    • Health Professionals and Support Services Award 2010
    • Higher Education Industry—Academic Staff—Award 2010
    • Medical Practitioners Award 2010
    • Nurses Award 2010
    • Professional Diving Industry (Industrial) Award 2010
    • Professional Employees Award 2010

There are others.

As you will quickly see, the failure to deal with these matters by including proper machinery provisions in the regulations has left providers (and their clients) dangerously exposed, if they choose to rely on them. In many cases, they will create false comfort and only the illusion of exemption.

Safe to assume?

Is it safe to assume that the Queensland Government would apply the machinery provisions of the Fair Work Act in order to make some sense of all this?

It might try to. It might even say that it intended to. But, in my opinion, the drafting of this regulation has not lived up to the intent. One can’t put in what the Government left out!

Common sense?

Is it safe to assume that a Court would adopt a “common sense” view of the Regulations and “write in” all the missing features that might help get a labour-hire provider “across the line”?

In my opinion, it is not. It is more likely that a Court would say that the Regulation, in its current form, lacks the necessary machinery to make it fully workable. In that respect, legislative drafting is a bit like software coding – there might have been a lot of common sense in having something included; but unless it has been written into the program, it’s not going to work as intended.

A “commercial” approach?

Is it safe to assume that clients will accept an unlicensed provider’s (self-serving) interpretation of the Regulations; and that they will accept, without question, that every worker whom the provider on-hires – whether to that client or someone else – receives the annual wages threshold, such that the provider does not need a licence?

I doubt it.

What’s more, I doubt that it’s very “commercial” for a provider to place itself on a path, where it can only ever supply exempt workers; and set itself up to have to jump through the application hoops sometime down the track, when it does want to supply a non-exempt worker, and has to explain to the regulator how it’s been operating up to that point.

I doubt that clients, who are sophisticated enough to require the services of high-income employees will consider it an attractive commercial proposition to seek supply from an unlicensed provider, when there are properly licensed providers in the market.

And I don’t know how “commercial” it will be for national and interstate providers to rely on an exemption that only operates in Queensland and not in Victoria or South Australia.

Opting not to seek a licence on the basis of Queensland’s high-income threshold exception is a high-risk strategy. It is one that I doubt many risk-averse clients would be prepared to buy into – especially in view the high penalties and prison sentences that apply to dealing with an unlicensed provider and in light of the mandatory avoidance reporting provisions in the Act.

It looks to me like the regulatory exception for employees, who earn above the high-income wages threshold isn’t one that you’d take to the bank!

What do you think?

Please note: This is a complex area of the legislation. I’d recommend that you seek advice from a qualified legal practitioner if you’re thinking of making use of this exception. And make sure you ask plenty of questions!

Andrew C. Wood