Labour hire industry regulation

Obligations on labour hire providers increased in 2017 with the introduction of the labour hire licensing laws. Further, the Fair Work Commission clarified that labour hire providers must themselves properly investigate allegations against a labour hire worker by a host company, and not simply rely on the host company's investigation.

Labour hire licensing legislative reforms

Regulation of the labour hire industry saw significant reform in 2017 with the introduction of mandatory labour hire licensing schemes in Queensland and South Australia, and the introduction of a Bill in Victoria. The State-based reforms have been introduced in the absence of a uniform national scheme, notwithstanding calls for national reform, including from a number of State governments.

Queensland was the first State to introduce a mandatory licensing scheme to the labour hire industry when it passed the Labour Hire Licensing Act 2017 (Qld). The Queensland Act will commence on 16 April 2018. The South Australian Parliament has passed the Labour Hire Licensing Act 2017 (SA) and the statute is awaiting assent. Victoria has introduced the Labour Hire Licensing Bill 2017 (Vic) to Parliament, and the Bill has been read a second time in the lower house.

In each jurisdiction, the legislation may apply extraterritorially. This means that a business that uses or supplies labour hire services with some connection to Queensland, South Australia or Victoria needs to understand its obligations under each scheme.

The three schemes are fundamentally similar. Each scheme prohibits the provision of labour hire services by an unlicensed person (including a company). Similarly, a person is prohibited from obtaining labour hire services from an unlicensed provider.

The schemes differ as follows:

In each instance, the legislation will apply widely due to broad definitions of “labour hire provider”. For example, in Queensland a person is a labour hire provider if “in the course of carrying on a business, the person supplies, to another person, a worker to do work”. Businesses that historically would not have regarded themselves as engaged in labour hire should carefully consider whether they may be caught by the definitions, particularly in relation to employee secondment arrangements.

Any business that engages labour hire providers will need to implement processes to ensure compliance with the new schemes. This should include:

• requiring any existing provider to demonstrate that it is appropriately licensed;
• amending contracts with any such provider to include reporting obligations with respect to the maintenance of such licences; and
• to deal with the consequences of a provider losing its licence.

Obligation on labour hire provider to investigate allegations against its workers

In Tasmanian Ports Corporation Pty Ltd t/a Tasports v Gee [2017] FWCFB 1714, a Full Bench of the Fair Work Commission confirmed that the decision of a host company to remove a labour hire employee from its site does not necessarily provide a valid reason for the labour hire employer to dismiss the employee.

A ship loader was accused of misconduct by the host company, which subsequently advised the labour hire provider that it had revoked the employee’s access to its sites with immediate effect. The labour hire employer accepted the host company’s decision without reviewing the host company’s investigation of the alleged misconduct, or conducting its own investigation. The labour hire employer then dismissed the employee on the basis that, as he could not perform work for the host company, he could not perform the “inherent requirements” of his role.

The Full Bench upheld the first instance decision which found that the employee had been unfairly dismissed. The Full Bench reiterated that a labour hire employer must make its own assessment of the allegations against its employee. If the labour hire employer is not satisfied that the employee has engaged in misconduct, the subsequent courses of action available to it will depend on the terms of its agreement with the host company. For example, the terms may give the host company discretion to remove the employee from its premises notwithstanding the labour hire employer’s view.

The Full Bench rejected the labour hire employer’s argument that such circumstances automatically provide a valid reason to dismiss the employee on the basis of his or her capacity to perform the role (being a criterion for the FWC to consider in an unfair dismissal claim). It emphasised that whether there is a valid reason for a dismissal will depend upon all of the circumstances.

Authors:  Emilie Maddox, Senior Associate; and Olivia McIntosh, Lawyer.