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

 

 

 

 

 

 

“What lessons can QLD take from how labour hire companies are regulated elsewhere?”

One really has to question the comparative methodology of yet another a publicly funded “labour hire inquiry”, which seems impliedly to justify a pro-licence position before anyone has given too much consideration to the history of regulation that has led to licence schemes in Australia and New Zealand being abandoned as anti-competitive arrangements that serve little useful purpose.  

If important lessons are to be learned, they will need be taken from comparative jurisdictions – i.e. jurisdictions, that like Australia, have lightly regulated labour markets and liberal markets for goods and services. So it might be a good idea to take lessons from jurisdictions closer to home.

Well, here are a few lessons: Continue reading