Queensland’s new labour hire licensing laws explained and analysedDec 2017
It’s official! Labour hire workers are at greater risk of being injured at work than ordinary employees.1 Workers’ compensation premiums for labour hire employees are also higher than premiums for employees generally.2 Anecdotally at least, so are public liability premiums and deductibles for businesses who regularly use labour hire staff.
None of these issues will come as a surprise to casualty underwriters or corporate users of labour hire providers.
Scope and reach
What is labour hire?
A person provides labour hire services if, in the course of carrying on a business, they supply a worker to another person to do work.3 The worker may be supplied directly to another person or through one or more agents or intermediaries.4
Who is a worker?
A worker is a person who enters into an arrangement with a labour hire provider, under which the provider:
- may supply the person to another person to do work; and
- the labour hire provider is obliged to pay the worker for the work.5
Who is caught?
In the current employment climate, where workforce flexibility underpins most business models, these wide definitions are likely to regulate the following arrangements:
- traditional arms-length labour hire providers;
- ‘internal’ or ‘captive labour hire’, where a business structures its affairs so that workers are employed by one entity in the company group, but perform work for another entity; and
- secondments and loans of workers from one employer to another.
The legislation is not intended to apply to traditional principal and subcontractor arrangements,6 genuine volunteer work, work experience placements arranged through an educational institution or recruitment services resulting in permanent placement. In the future, it is likely that regulations will be enacted to clarify the application of the Act and explicitly exclude certain types of arrangements.
Obtaining a license
Licenses will be granted for a term of one year9 and may be subject to conditions such as the requirement to hold insurance, lodgement of a security and be open to inspection of premises at regular intervals.10
License holders will have ongoing bi-annual reporting requirements from the date their license is granted. These reporting requirements will provide a wealth of information about labour hire service providers, including:11
- the number of workers deployed;
- the arrangements between the workers and the license holder;
- the location and type of work that has been performed;
- details of any disciplinary or enforcement action taken against the license holder; and
- the number of notifiable incidents and workers’ compensation applications involving the license holder.
Labour hire register
Objectives – will they be achieved?
The enactment of this legislation follows completion of a parliamentary inquiry into labour hire practices in Queensland. As mentioned, one of the key findings of the inquiry was that labour hire workers are at much greater risk of injury occurring in the course of their work. The factors which contributed to these outcomes included:
- labour hire workers receiving limited training and supervision and potentially being deployed to perform work to which they were not ideally suited;
- an unwillingness of labour hire workers to raise workplace health and safety issues due to perceived job insecurity;
- the limited capacity of labour hire providers to exercise supervision and monitoring of their employees’ work activities; and
- lack of clarity around the division of responsibility for safe work systems, assessing work suitability and devising and implementing safe work systems between labour hire providers and the host employers who use them.
Specifically, there can be a tendency amongst commercial labour hire providers to play a subsidiary role in relation to worker safety. Often, seemingly little or no attention will be paid by the labour hire provider to worker selection, host employer work systems, site specific assessments and ongoing monitoring of performance.
Host employers must also still comply with the existing work health and safety laws, which do cover the field in relation to worker safety. It may be thought that this will, in combination with the Act, improve worker safety in an overall sense.
Implications for users of labour hire providers
As mentioned, the need for labour hire users to ensure that they are sourcing workers from licensed providers does bring with it the added burden of checking the credentials of their provider. However, mainstream commercial suppliers are likely to make this easy for their clients to achieve.
Opportunities for casualty underwriters
If an underwriter knows that a host employer uses labour hire services and who its provider is, they will be able to check the safety track record of the provider. Whether the register will eventually identify the host involved in any particular incidents remains to be seen.
As mentioned, those groups who elect to persist with the ‘internal’ or ‘captive’ labour hire structure should also now be searchable.
While South Australia will also have a freely accessible register of licensees, the licensee’s notifiable incidents and workers’ compensation claims will not be published. In the future, regulations may be introduced requiring the publication of this information.
The Victorian Government is currently in the consultation phase of introducing labour hire licensing legislation following its own inquiry into the labour hire industry.15 As in Queensland and South Australia, the Victorian legislation is likely to require that license applicants demonstrate they are good corporate citizens, set up a public service unit for monitoring compliance with the licensing scheme, and maintain a register of licensees.