Victoria S Labour Hire Licensing Schemeconsultation Paper -Development of Regulations

VICTORIA’S LABOUR HIRE LICENSING SCHEMECONSULTATION PAPER -DEVELOPMENT OF REGULATIONS

Introduction

On 10 September 2017, the Victorian Government announced its intention to introduce legislation establishing a labour hire licensing scheme.

Regulations to be made under the legislation will address many details of the scheme. Industrial Relations Victoria, along with Deloitte Access Economics, has begun preparing a Regulatory Impact Statement for these regulations, as required under Victorian law.

We have prepared this Consultation Paper to address an important aspect of the licensing scheme, namely what types of activities will constitute labour hire, and which businesses will therefore require a licence under the scheme.

This issue will be addressed partly within the legislation itself, and partly within the regulations made under it.

We invite interested stakeholders to provide detailed feedback on the issues addressed in this Consultation Paper, to inform the development of this aspect of the scheme.

Please provide written feedback to IRV, by email to close of business on Wednesday 6 December 2017. All responses will be treated as confidential and will not be published.

Background

The Victorian Government established the Inquiryinto the Labour Hire Industry and Insecure Workin October 2015 to examine work arrangements inthe labour hire industry, and the extent of insecurework in Victoria. The Inquiry reflected concernsraised in a number of high profile media reportswhich exposed systemic underpayment andexploitation of labour hire workers.

Professor Anthony Forsyth of RMIT Universitychaired the Inquiry. There was a high level ofinterest in the Inquiry, which received 695 writtensubmissions (91 from organisations and 604 fromindividuals), and heard from over 200 individualwitnesses over 17 hearing days across Victoria.

• The Final Report of the Inquiry was tabledin Parliament on 27 October 2016. Key findingsof the Inquiry included that: the labour hire industry is a significant employer of Victorian workers and a major contributor to the Victorian economy. There are various legitimate and sound commercial reasons for Victorian businesses to utilise labour hire arrangements. Labour hire enables a flexible approach to the engagement of labour which assists businesses deal with peaks and troughs in demand;
• notwithstanding this, there is a significant problem with ‘invisible’ labour hire agencies and arrangements, operating almost entirely outside existing regulatory frameworks; and
• there are various ways in which labour hire workers are treated almost like a “second class” of worker, with treatment ranging from outright exploitation in certain sectors through to differential treatment in respect of issues like health and safety, dismissal and rostering.

The Inquiry recommended the establishment of a labour hire licensing scheme in Victoria. The Government Response in May 2017 accepted these recommendations in principle or in full. On 10 September 2017 the Government announced key features of the licensing scheme.

Key features of the licensing scheme include:

• Providers of labour hire services in Victoria will be required to be licensed – they will need to declare and demonstrate that the business and its key personnel are fit and proper persons and are compliant with workplace laws, labour hire industry laws and minimum accommodation standards.
• Users of labour hire services (hosts) will be required to use only licensed providers.
• Substantial civil financial penalties will apply to providers operating without a licence, and to hosts engaging an unlicensed provider.
• The licensing scheme will be administered by a Commissioner for Labour Hire Licensing, as head of an independent Labour Hire Licensing Authority. The Commissioner and the Authority will be responsible for licensing decisions, maintaining a register of licensees, investigations, compliance, education and development of a voluntary code for labour hire operators.
• An inspectorate within the Authority will have broad powers to investigate non-compliance with the licensing scheme.
• Interested persons will be able to object to licence applications and request reviews into some licensing decisions.

The licensing scheme is expected to improve transparency of the labour hire industry, improve compliance with workplace and other laws and protect vulnerable employees from exploitative behaviour. Licensing is expected to establish an even playing field for labour hire providers by making it harder for unscrupulous operators to participate in the market.

Application of the licensing scheme

The Inquiry’s Final Report described labour hire employment arrangements as typically involving a ‘triangular relationship’ in which a labour hire agency supplies the labour of a labour hire worker to a third party (host) in exchange for a fee (labour hire employment arrangement). In a labour hire employment arrangement, there is no direct employment or contractual relationship between the host and the labour hire worker. Instead, the worker is engaged by the labour hire agency, either as an employee or as an independent contractor.

The Inquiry Report cites Creighton and Stewart’s Labour Law which describes labour hire as involving:

“… the agency entering into an agreement with the worker, and arranging to hire out their services to a host, or to a series of hosts. The worker generally performs these services at the host’s premises, and may be supervised (if their work requires supervision at all) either by the host’s staff or by other workers supplied by the same, or a different, agency. The worker is paid by the agency, but aside from any requirement to submit timesheets may have relatively little contact with it. The host, on the other hand, pays a fee to the agency which covers the worker’s remuneration and any associated on-costs. … In many instances the nature of the arrangement is such that there is no obligation on either side to give or accept work. If an assignment is accepted, a contract is formed (usually on the agency’s standard terms). But in between assignments, there may be no mutuality of obligation and hence no contract.”

Victoria’s labour hire licensing scheme will apply to all providers of labour hire services in Victoria.

However, we want to ensure that the scheme does not capture arrangements for supply of workers to a third party which would not be commonly understood as labour hire arrangements. It is important for the effective operation of the scheme that its application is targeted and clear to all parties. Accordingly, the legislation or regulations may limit its application, or carve out certain types of arrangements from the operation of the scheme. We are seeking your detailed feedback on several proposed limitations on the scheme’s application, or exemptions from the scheme’s requirements.

Potential categories of limitations or exclusions could include:

• Limiting the scheme’s application to providers who supply workers to another business or undertaking, rather than to an individual not conducting a business or undertaking;
• Limiting the scheme’s application to where a worker is working in and as part of the business or undertaking of the host, rather than in and as part of the business of the provider;
• Excluding secondment of employees;
• Excluding provision of volunteer workers;
• Excluding genuine subcontracting arrangements, unless there is a particular feature of a subcontracting arrangement which mimics a labour hire arrangement and thus warrants its inclusion;
• Excluding provision of professional/tradeservices to a third party (such as medical, legal, accounting, architectural, workforce consulting services), unless there is a particular feature of a professional service provision which mimics a labour hire arrangement and thus warrants its inclusion;
• Excluding pure outsourcing of a business or part of a business;
• Excluding where a worker performs work for a related corporation/ common joint venture participant/partner of the provider;
• Excluding short term, ad hoc, arrangements between similar businesses (such as a worker of one farm business assisting another farm business by picking crops for a day, or the worker of one concrete business providing assistance to another concrete business for a few hours during a concrete pour);
• Excluding work experience/educational placements; and
• Excluding Registered Group Training Organisat

In particular, we would like to know:

• How would the limit or exemption best be formulated?
• Are there any unintended consequences of the limit or exemption, and could these be overcome by a different or more limited exemption?

We are also seeking feedback on any otherpotential limits or exemptions considered necessary or desirable. However, these are notintended to be used to exempt certain industriesor occupations from the scheme. Nor are they intended to exempt particular occupations, or the supply of particular workers, such asthose who are highly paid.

Rather, exemptions in the regulations are intended to exclude activities which are not commonly understood to be labour hire, but which might otherwise be caught by the scheme due to the similarity of the legal relationships involved.

Responses to Consultation Paper

Industrial Relations Victoria is seeking feedback in writing on the above issues by no later than close of business on Wednesday 6 December 2017.

Please provide your written feedback by email to . Emails must be no greater than 25 megabytes in size.

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Victoria’s Labour Hire Licensing Scheme
Consultation Paper - Development Of Regulations