Why a “moral” payment obligation might indicate the need for a labour hire licence

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As you know, a payment obligation has to be part of the arrangement between the provider and the individual who performs the work if the individual is to be regarded as the provider’s worker (as that term is defined).

Throughout the “Lachie & Martin” series of videos , I’ve been suggesting that, even where a temping agency arranges for a payroll company to go “on record” as the employer of its temps, the agency can be left with a residual payment obligation sufficient to constitute the temps as its “workers” for the purposes of the labour hire licensing Acts. Why is that?

It’s because that Acts are clear that the arrangement between a labour hire provider and the individual who performs the work needn’t be contractual.

Now, if the arrangement needn’t be contractual, it follows that the payment obligation needn’t be contractual either. So what sort of obligations could those be? I can think of several different sources for such an obligation. Perhaps you can too.

Keep in mind that an arrangement, as distinct from a contract, is essentially a plan of action that the parties intend to put into effect with a sense of (moral) committment to it even though it may not be legally enforceable.

What temping agency, when it is setting its temps up to be employed by a payroll company, doesn’t enter into such an arrangement? It’s the arrangement, rather than the employment contract, that can leave the temp agency with the residual obligation… and, hence, the need to obtain a licence.

We’ll take a closer look at some typical arrangements next month, when we examine the “employer-of-record” phenomenon as well as some of the myths surrounding it.

Andrew C. Wood

Lachie & Martin examine their consultancy project team for labour hire licensing supply arrangements: Part 3 – Temp Agencies & Payroll Providers

In thisa third and final part of the series, Fictional characters, Lachie & Martin are back to examine the staffing arrangements for their consulting project team. This time, they’re focusing on the Interstate Temp Agency and Payroll (Employer of Record) Providers. Does anyone need a licence? Let’s find out.

Keep Checking Your “ACN Contractors”

I wonder if the message is getting through to labour hire providers, yet, that the reason why all four Australian labour hire licensing schemes need an “incorporated worker exemption” is that all those companies that their “ACN contractors” are working through are supplying their people to other people to perform work.

In short, they’re micro labour hire firms.

There are probably thousands of them – maybe tens of thousands.

So, the regulations and exempt worker declarations exclude some individuals who are supplied to perform work through their own companies from the definition of “worker“.

And because you can only be a labour hire provider under a supply arrangement if you suppply a “worker” as defined, excluding them from the definition means that the individuals are not “workers” for their own companies, which therefore don’t need licences.

Pretty cool work-around when you think about it. But there’s a hitch.

The exemptions are very technical and they differ from jurisdiction to jurisdiction. Basically, that can mean that your ACN Contractor mightn’t need a licence in, say, Victoria; but could need one in the A.C.T.

The sort of factors you need to consider include:

  • how many directors the company has;
  • how many individuals it supplies to perform work for other people;
  • whether the individuals have a management role or share in profits.

You also need to check how the individuals actually get paid by their ACN entities, because not all payments are payment for the work performed. Some are share dividends; others are trust distributions; some payments might be by way of directors fees – all of which might not be able to be characterized as payments for the work performed.

So, keep checking the arrangements that your ACN contractors have with the individuals who perform the work.

And keep in mind that circumstances can change. Someone’s mother is appointed as a director and suddenly the maximum number of directors required for the exemption to operate is exceeded; or someone’s little brother starts freelancing through the Contractor’s entity, and the maximum number of workers required for the exemption to operate is exceeded.

Before you know it – and perhaps without knowing it – you’re involved in an unlicenced labour hire supply arrangement.

You wouldn’t want that, would you?

Andrew C. Wood

Cast the Spotlight on Your Labour Hire “Arrangements”

In discussions throughout October and November about labour hire licensing, I’ve observed that there seems to be a bit of a misconception about who’s a provider and who’s merely an intermediary. 

The misconception is fueled by the false notion that it comes down to who’s on record as the employer.

We know that notion doesn’t stack up, because the labour hire licensing Acts all state that a person can be a labour hire provider regardless of whether the provider enters into any contract with the worker for the performance of the work.

One view that I’m coming to is that the critical question is not, “Who’s the employer?”; but rather, “Who makes a labour hire arrangement with the individual who performs the work?”

And those arrangements can come in many different forms.

There can even be more than one labour hire arrangement with the same worker in respect of the same labour hire transaction.

So, when you’re examining your workforce supply or procurement models, ask yourself this question: “Who makes ‘arrangements’ with the individuals who are to perform the work?”

Try to keep in mind that an “arrangement” need be nothing more than a plan of action between two people that may not be enforceable at law but which they have every intention of following to the extent that they feel some moral commitment to it.

Some of the answers could be:

  • Recruiters
  • Temp agencies
  • Payroll providers
  • Accommodation providers
  • Contractor management services providers
  • The individuals’ own entities – if they are operating as “incorporated workers”.

Give it a try.

Make a list, and then check to see whether the arrangements that you’ve identified need to be supported by labour hire licences (Qld, SA, Vic, ACT) and/or private employment agency licences (SA, WA, ACT).

You might be surprised at what you discover.

Andrew C. Wood

Lachie & Martin examine their consultancy workforce supply arrangements – Part 2: the external specialist contractors.

Fictional characters, Lachie and Martin, are back to use their 4-Step process once more, as they examine their consultancy workforce supply arrangements to check for A.C.T. labour hire licensing issues. In Part 1, they examined the in-house employee members of the workforce. Nowthey have to examine arrangements with the external specialist contractors they’re recruiting for a secret defence industry project – all hypothetical of course!

Spoilers: Lachie and Martin uncover a few new issues that might resonate with commercial litigators searching for “triable issues” in the labour hire licensing schemes of the four states and territories. Let’s hope they never have to argue them!

A big “Thank You” to Ian Lindgren of PayMe for contributing this scenario, which allowed me to test the principles and methodology I’ve been developing to identify labour hire licensing issues in supply arrangements.

Lachie and Martin examine their consultancy workforce supply arrangements: Part 1 in-house employees.

Fictional characters, Lachie & Martin, examine their consultancy workforce supply arrangements to check for A.C.T. labour hire licensing issues. In Part 1, they examine the in-house employee members of the workforce. In later eposodes, they will examine the external contracted specialists and the auxiliary staffing agency sourced members of a consultancy workforce they’ve assembled for a secret defence industry project – all hypothetical of course!

A big “Thank You” to Ian Lindgren of PayMe for contributing this scenario, which allowed me to test the principles and methodology I’ve been developing to identify labour hire licensing issues in supply arrangements.

Australian Labour Hire Licensing: Providers and Intermediaries (cont’d)

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In this post, I report on WorkAccord’s continuing examination of the topic of Australian labour hire arrangement intermediaries and attempt to untangle the knotty problem of distinguishing providers (who need labour hire licences) from mere intermediaries (who don’t).  

I put forward a fresh proposition that it is possible, within labour hire supply arrangements, for there to be more than one labour hire provider in respect of the same worker/s, and suggest that the possibility arises from the different types of arrangement which a provider may have with its workers and from the different sources of the attendant payment obligation.   

Drawing on the competition cases, I also discuss what is meant by an “arrangement”, and how the licensing schemes’ focus on arrangements rather than on contracts results in casting a very wide net that is intended “to ensure that labour hire arrangements cannot be hidden behind a particular set or combination of arrangements”.

I conclude with some practical tips for identifying and analysing labour hire arrangements under the labour hire licensing schemes.

Progress so far…

So far, we’ve untangled the following threads:

  1. In order to distinguish between providers (who need labour hire licences) and intermediaries (who don’t, but may need other types of licence)[i] it is necessary to examine the whole of the arrangement by which workers are engaged, supplied, managed, accommodated, and paid.
  2. That means we need to consider arrangements made with:
    • work seekers;
    • clients – either hosts (hirers) or users.[ii]
  3. Three types of arrangement may require a labour hire licence:
    • supply arrangements (Qld, SA, Vic, ACT);
    • accommodation/ recruitment arrangements (Vic); and
    • contractor management/ recruitment arrangements (Vic).
  4. The arrangements can be distinguished according to their different functions and the different definitions of worker applicable to each type of arrangement.
  5. We can identify three broad types of intermediaries who may participate in the arrangements recognised in the legislation: supply intermediaries; recruitment/ placement intermediaries; and payment intermediaries. They can also be distinguished by the functions they perform.
  6. Intermediaries participate in arrangements between:
    • a provider and a host (“host-side intermediaries”); and/or
    • a provider and a worker (“worker-side intermediaries”)
  7. Other participants may sometimes be involved in labour hire arrangements – e.g., by supplying supporting services without being either an intermediary or provider.
  8. Intermediaries and other contributing participants can be distinguished from providers because only providers have workers (as defined).
  9. The definitions of worker in Qld, S.A. and the A.C.T. all require that the individual who is to perform the work enters into the requisite arrangement with the provider. This would seem to require that the provider and the worker make reciprocal commitments to each other; although they need not be legally enforceable.  
  10. Contrastingly, the various definitions of worker in Victoria require merely that an arrangement be “in force”. The different formula used in Victoria potentially raises a question about whether a worker could be a passive participant in such an arrangement – that is to say, whether a worker could be “entered into an arrangement” made by others, without the necessary reciprocal commitment and perhaps without knowledge or consent.
  11. We prefer the view that this question should be answered in the negative, because Vic. s. 9 requires that the arrangement must still be between the individual and the provider. We also consider that passive entry into a labour hire arrangement would be inconsistent with the principle that a contract of employment (at least) cannot be novated or assigned without the employee’s consent;[iii]and would run counter to the dictum in Gribbles Radiology that “no employee is an asset in the employer’s balance sheet to be bought or sold”.[iv] Accordingly, we take the view that the making of reciprocal commitments between provider and worker is also an essential element in Victoria.

Weaving some of the threads untangled so far

We applied these propositions to examine a hypothetical scenario for a fictional, Canberra-based, temp staffing agency. 

Our fictional agency, “Holdings” claimed that:

  • it did not supply its temps directly; other related companies did that; and
  • it did not pay its temps; an outsourced payroll company did that.

In that examination, we reached a point where it appeared that “Holdings” would require a labour hire licence for the supply arrangement it had with its temps. 

We also discovered some additional supply intermediaries and a payroll intermediary. Finally, we highlighted some “loose ends”, which we were able to pick out from the intermediaries’ involvement in Holdings’ supply arrangement.

You can follow that story by viewing our YouTube video, A.C.T. Supply Arrangements with Ashlee and Daniel.

Picking out a new thread

The exercise led us to uncover a further proposition, which we can now state provisionally:

  1. When intermediaries, participating in an arrangement, additionally form their own arrangements with workers, there arises the possibility that those participants have ceased to be intermediaries and have become providers. In this scenario, it seems that there can be multiple providers, having different payment obligations – some legal (e.g., arising from an employment contract); some “moral” or equitable arising from non-contractual “arrangements”.

It’s not just about the contract

This possibility suggests that we need to look more closely at what is meant by an “arrangement” – particularly as there seems to be a view, currently circulating, that all issues can be determined by the agreed terms of the parties’ formal contract.

We know that view doesn’t stack up because the express provisions of the labour hire licensing Acts of Qld, Vic and the A.C.T. all state that a person can be a labour hire provider regardless of whether the provider enters into any contract with the worker for the performance of the work.

Focus on the arrangement

The labour hire licensing Acts focus on arrangements between providers and their workers.  We know, from our consideration of “the Regardlesses”, that an arrangement need not be contractual.

The “Regardlesses” are the set of provisions, inserted into each of the four Acts,[v] that provide that a person may be a labour hire provider regardless of whether they: employ their workers; have a contract with their worker; have a contract with their hosts/hirers; or supply workers directly or through intermediaries.

There are some variations between the states and territories, but the labour hire licensing Acts are intentionally cast very wide. The pattern was laid down in Qld and set out in the accompanying Explanatory Memorandum:

“…a provider provides labour hire services whether or not:

  • the worker is their employee;
  • a contract is entered into between the worker and provider, or between the provider and the [hirer];
  • the worker is supplied by the provider to another person directly or indirectly through one or more agents or intermediaries, for example through a chain of labour hire arrangements; and
  • the work done by the worker is under the control of the provider… or another person…

This is to ensure that labour hire arrangements cannot be hidden behind a particular set or combination of arrangements.”

What is an arrangement?

The Australian Competition and Consumer Commission (ACCC) provides helpful guidance about what is meant by an “arrangement” in competition law, where certain contracts, arrangements or understandings may be unlawful. It says:[vi]

“Essentially, [arrangements and understandings] involve the development of a plan of action between two or more people that may not be enforceable at law but they have every intention of following.

…when each of two or more parties intentionally arouses in the others an expectation that he (sic) will act in a certain way, it seems …that he (sic) incurs at least a moral obligation to do so. An arrangement as so defined is therefore something whereby the parties to it accept mutual rights and obligations.”[vii]

The ACCC goes on to explain:[viii]

“To …make an arrangement it is not necessary for anything to be written down. In fact, such agreements are often not put into writing. Nothing need even be expressed—a ‘nod and wink’ is sufficient.

If necessary, the court will infer the requisite ‘meeting of minds’ from circumstantial evidence such as evidence of joint action, similar pricing structures, or even from evidence of opportunities the parties had to reach an understanding.

It is important to consider both what is actually said and what each party understands to be the position.”

Consistently with that broad view of what amounts to an arrangement, the Victorian regulator explains, simply, that “arrangements include informal or formal agreements.[ix]

Something more than a mere hope.

However, an arrangement involves something more than a mere hope or expectation.

In ACCC v Channel Seven Brisbane Limited, the High Court said:[x]

“An arrangement or understanding ordinarily involves an element of reciprocal commitment even though it may not be legally enforceable. It involves more than a mere hope or expectation that each party will act in accordance with its terms.”

So, what is the something “more” – the additional element that converts loose assent, or a sense that “we are all on the same page”, into an arrangement of interest under the labour hire licensing Acts?

A helpful explanation was provided by Gray J in Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd,[xi] when considering the related expression, “understanding”. Once again, it takes us back to a sense of “moral obligation” or – an expression that I especially like – something that is “binding in honour”.

“…there can be no such thing as an understanding that leaves each party to it free to do whatever it wishes. Whatever word may be chosen to represent the essential element of an understanding for the purposes of the relevant statutory provisions, it is clear that element involves the assumption of an obligation, unenforceable in any court of law, but merely morally binding or binding in honour.”

Practical application

Armed with this information, you may now be in a position to review your own operations to see if you are involved in any labour hire arrangements that you make, participate in, or support – whether as a provider, host/hirer, intermediary, user, or contributor.

Think about who all the participants in the arrangement are and identify what roles they play. You might want to pay particular attention to any points in your operations that interface directly or indirectly with the people who are to perform the work.

Keep in mind that inter-state labour hire arrangements may be governed by more than one licensing scheme.

Next, you might try to identify what type of labour hire arrangements they are – whether they are supply arrangements, recruitment/accommodation arrangements, or recruitment/ contractor services management arrangements.

When you are scanning for labour hire arrangements governed by the South Australian and Victorian licensing schemes, you’ll have to apply the different “work-(in-and)-as-part-of” qualifications. That could necessitate your undertaking fact-sensitive inquiries similar to those required to apply the employment agency provisions of payroll tax legislation.   

In South Australia, you’ll be able to limit your investigation to arrangements for the performance of “prescribed work”.[xii]

In Victoria, you’ll additionally need to scan for recruitment/ accommodation arrangements[xiii] and recruitment/ contractor services management arrangements.[xiv]

Once you’ve identified your arrangements of interest, check to see if they involve persons who are your workers (as defined) for each type of arrangement that you participate in.

Remember, that some workers are exempted under the supporting regulations and declarations. If you reach a conclusion that an individual appears to be your worker (as defined) make sure you go on to the next stage and consider the various grounds for exemption.

Supply Arrangements & Recruitment/ Accommodation Arrangements

For supply arrangements and recruitment/ accommodation arrangements, where the payment obligation falls can be a deciding factor.

Keep in mind that a payment obligation can arise even if you are not the employer or engager of the worker, and that it needn’t be a contractual obligation – a moral obligation would seem to suffice.

Work out where each payment obligation falls. It might fall on you, or it might fall on another participant in the arrangement. Different types of payment obligation may fall on more than one participant in the arrangement.

You will use that information to work out whether the people who are to perform the work are your workers (as defined) for the purposes of the particular type of labour hire arrangement you are investigating.

Under a supply arrangement, the payment obligation falls on the person/s who is/are supplying the worker.

Under a recruitment/ accommodation arrangement, the payment obligation falls on the person for whom the work is performed.[xv]

If the persons who are to perform the work turn out to be your workers (as defined), you are probably a labour hire provider.  If they are not your workers, you are likely to be an intermediary, user, or host/hirer; or to be providing support services.

Recruitment/ Contractor Management Services Arrangements

Under a recruitment/ contractor management services arrangement, it is not material where the payment obligation falls. What matters is whether the person who recruits the worker manages the contract performance by the worker.[xvi]

Note that the object of the management services is performance by the worker.  Although the Victorian Regulator has issued guidance material[xvii] indicating that:

Examples of businesses that are captured by this provision include businesses that recruit or place independent contractors, and then provide ongoing administration and payroll functions, or supervision or performance management functions for hosts.

It may be necessary to distinguish between performance of the work contract by the worker and performance by the person for whom the worker performs the work. It is difficult to see, for example, how the provision of a payroll function for a host involves performance of the work contract by the worker – except perhaps to the extent that it involves management of time sheet completion and validation.

Conclusion: A problem for the commercial courts?

You will quickly see what the problem is – the Labour Hire Licensing Acts are couched in language that is either so general or so nuanced that it is difficult to interpret. 

Those points might not be pursued in an enforcement action, where priority might be given to the prosecution of clearly unlawful and egregious conduct. But they are precisely the sort of point that could be fairly taken by a commercial litigation defence lawyer to defeat or delay a claim for payment on the grounds that the services for which payment is claimed arguably involve unlicensed labour hire services.

In later posts, I will address additional scenarios and begin to explore the worker exemptions in greater detail. I’ll also address intermediary and host/hirer responsibilities and penalties that may be imposed for breach or involvement in avoidance schemes.

I hope this exploration to date has helped to distinguish between providers and intermediaries a little more clearly, and that it has outlined an approach to characterisation that you can implement. So far, the results have been promising.

Let’s talk again soon.


[i] For example, an employment agents licence under the Agents Act 2003 (ACT); Employment Agents Registration Act 1993 (SA); Employment Agents Act 1976 (WA).  Qld and NSW also have vestiges of private employment agent regulation but no longer have PEA licensing schemes.

[ii] We distinguish hosts/hirers as the person for whom the work is performed from users (of labour hire services) who are found as host-side intermediaries in a workforce services contracting chain. Users typically do not enter into any arrangement of substance with workers, but merely “buffer” the relationship between a labour hire provider, who does have such an arrangement, and a host who requires work to be performed.

[iii] Nokes v. Doncaster Amalgamated Collieries, Ltd. [I9401 A.C. 1014.

[iv] Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd Gribbles Radiology Pty Ltd v Health Services Union of Australia [2005] HCA 9 at [48].

[v] Qld s. 7 (2);  SA s. 7 (3);  Vic ss 7 (2), 8 (3) and 9 (3);  ACT s. 7 (3).

[vi] ACCC (n.d.) Anti-Competitive Conduct, https://www.accc.gov.au/business/anti-competitive-behaviour/anti-competitive-conduct.

[vii] Drawing on the Federal Court decision in TPC v Nicholas Enterprises Pty Ltd (No 2) (1979) FLR 83.

[viii] ACCC (n.d.) Anti-Competitive Conduct op. cit.

[ix] Labour Hire Authority (n.d.) Guidance Note on provision of information about workers https://labourhireauthority.vic.gov.au/media/1017/provision-of-information-under-s19.pdf

[x] Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Limited [2009] HCA 19 per French CJ and Kiefel J at [48].

[xi] [2007] FCA 794 at [37].

[xii] S.A. s. 6 defines “prescribed work” as  cleaning work; horticultural processing work; meat processing work; seafood processing work;  trolley work; and any other work of a kind prescribed by the regulations.

[xiii] Vic. S. 8 (1)

[xiv] Vic. S. 8 (2)

[xv] Vic. S. 9 (2) (a).

[xvi] Vic. S. 9 (2) (b).

[xvii] Labour Hire Authority (2019) “Contractor Management Services” https://labourhireauthority.vic.gov.au/provider/contractor-management-services/

Ashlee and Daniel examine their ACT non-standard labour hire supply arrangement

During October we’ve been working on several projects that examine different aspects of the Australian labour hire licensing schemes.

In this short video, fictional characters, “Ashlee & Daniel” examine their ACT non-standard labour hire supply arrangement and learn about the distinction between providers who need a licence and intermediaries who don’t.

Should they apply for a licence? What do you think?

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

Photo by Marius-Laurentiu Butan on Pexels.com

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

Labour Hire Intermediaries: Untangling a Knotty Topic

Photo by Marius-Laurentiu Butan on Pexels.com

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