In Short
- Operating a labour hire business in South Australia requires compliance with specific licensing requirements.
- Key obligations include ensuring the health and safety of workers and adhering to fair work practices.
- Regular audits and assessments are necessary to maintain compliance and avoid penalties.
Tips for Businesses
To run a labour hire business in South Australia, secure the necessary licences and regularly review your compliance with all legal obligations. Implement health and safety measures and fair work practices for your workers. Staying updated with legislative changes ensures your business remains compliant and avoids legal issues.
Before opening a labour hire business in South Australia, there are several issues to consider that will ensure your success. The Labour Hire Licensing Act 2017 requires anyone providing labour hire in South Australia to have a license. If you provide labour hire services without a license, or fail to abide by relevant employment laws, you may face some penalties. Having well-drafted labour hire agreements and employment agreements in place minimises your risk of any potential disputes arising. This article outlines some key legal factors to ensure you have a secure foundation when starting a labour hire business in South Australia.
Recruitment or Labour Hire Business
While recruitment businesses and labour hire businesses are similar in that they both connect workers with businesses, there are key differences between them.
A recruitment company will provide businesses with candidates who meet their job criteria. The client business will then meet and select a suitable candidate and engage them as an employee. Once the candidate becomes an employee, their relationship with the recruitment business ends.
In comparison, a labour hire business has an ongoing relationship with their candidates or workers. A labour hire business will directly employ workers and provide them to other companies, known as host businesses, who require extra labour. As labour hire businesses are directly employing workers, they also need to ensure the host business provides workers with their employment entitlements.
Benefits of Labour Hire
Starting a labour hire business can be a great investment because they are highly sought after by host businesses. This is due to the numerous benefits they offer, including:
- fewer costs when compared to recruitment companies;
- efficiency for host businesses, as they spend less time on recruitment;
- easy access to expertise within a specialised skill set; and
- flexibility as labour hire businesses can provide workers to suit the current demand and workload of host businesses.
Labour Hire Licences in South Australia
You must acquire a labour hire licence in South Australia if the workers you provide undertake:
- horticulture processing;
- meat processing;
- seafood processing;
- cleaning; or
- trolley collection.
Additionally, you will need a licence if:
- your business aims to provide workers for a host business;
- you have an arrangement with your workers to supply them to work for a host business; and
- your business pays the workers you provide to host businesses.
However, not all businesses require a labour hire licence. You may not need a licence if your business provides workers:
- to another business within the same group of companies. For example, if a parent company supplies workers to a subsidiary company, they may not need a labour hire licence;
- where labour hire services are not a core function of the business. For example, if a medical centre occasionally provides doctors to work at a hospital, they may not need a labour hire licence;
- to another business that is part of the same franchise; and
- to another business collectively operating under the same branding or trading name.
How to Obtain a Labour Hire Licence
If you need to obtain a labour hire licence for your business, you can apply through South Australia’s Consumer and Business Services online form. You can apply for a licence as an individual if you are operating as a sole trader, or as a body corporate if you operate through a company. The application process requires careful attention to detail and thorough documentation. Before applying for a licence, you will need to:
- ensure each person in your application has obtained a National Police Certificate within 12 months;
- provide a letter (dated within six months of your application) from an accountant confirming that your company is financially solvent;
- meet the relevant knowledge and experience requirements, such as successfully completing certain courses or holding a current and equivalent interstate licence;
- demonstrate that you have at least two fit and proper people who are responsible for the day-to-day management and operation of the business;
- provide detailed information about your business operations, including your workplace health and safety policies and procedures;
- show evidence of compliance with relevant employment laws and standards; and
- if applying as a body corporate, ensure that all directors and each responsible person has a current National Police Certificate.
Employment Agreements
An employment agreement clearly sets out the relationship and rights between your business and your workers as your employees. Having a written agreement in place shows your commitment to your workers while also minimising the risk of a future dispute. It is important to outline the key factors of the engagement within the employment agreement such as:
- payment terms;
- working hours;
- leave entitlements; and
- termination.
You must also provide your workers with the required entitlements under the National Employment Standards (NES), including:
- maximum weekly hours;
- requests for flexible working arrangements;
- annual leave;
- parental leave and related entitlements;
- personal carer’s leave, compassionate leave and family and domestic violence leave;
- community service leave;
- long service leave;
- public holidays;
- superannuation contributions
- notice of termination and redundancy pay; and
- Fair Work Information Statement.
Labour Hire Agreement
Similarly to having a written employment agreement in place, a written labour hire agreement outlines your legal relationship with the host business. This includes your:
- rights;
- obligations; and
- expectations.
A labour hire agreement should detail exactly how a host business engages you and how you supply workers to them. This agreement is crucial in minimising future disputes with hosts businesses or your workers.
Your labour hire agreement should also detail:
- the performance of obligations and regular reviews;
- the process of requesting workers;
- legal obligations, for example, employment law requirements;
- insurance requirements;
- the method of resolving disputes; and
- invoicing requirements.
As a labour hire provider, you must provide the host with:
- your labour hire licence number;
- your name and contact details; and
- the name and contact details of the responsible person for the licence.
It is important to note that significant penalties apply if you fail to provide these details to the host or if you provide labour hire services without being licensed. Hosts can also be fined if they use an unlicensed labour hire provider.
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Compliance and Ongoing Obligations
Operating a labour hire business in South Australia comes with ongoing compliance responsibilities. It is crucial to stay up-to-date with changes in labour laws, workplace health and safety regulations, and industry-specific standards. Regular audits of your internal processes can help ensure continued compliance with licensing requirements and labour laws. Pay particular attention to wage rates, superannuation contributions, and leave entitlements, as these are areas where non-compliance can lead to significant penalties.
Additionally, maintaining open communication channels with both your workers and host businesses can help you identify and address potential issues before they escalate. Consider implementing a robust system for tracking worker placements, hours worked, and any workplace incidents. This not only aids in compliance but also provides valuable data for business planning and growth strategies.
Remember, your labour hire licence is subject to periodic renewal, so it is essential to maintain proper documentation and be prepared for potential inspections by regulatory authorities. By prioritising compliance and maintaining high ethical standards, you can build a reputation as a trustworthy labour hire provider in the South Australian market.
Key Takeaways
To ensure the success of your labour hire business in South Australia, you must adhere to the licensing requirements to avoid being penalised. Having well-drafted written employment agreements and a labour hire agreement is best practice to ensure your legal compliance and protect your business from potential risks.
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Frequently Asked Questions
Recruitment businesses connect candidates with businesses for potential employment, ending their relationship once a candidate is hired. Conversely, labour hire businesses directly employ workers and supply them to host businesses, maintaining an ongoing relationship and ensuring workers receive their entitlements.
To obtain a labour hire licence in South Australia, apply via the Consumer and Business Services online form. Submit a National Police Certificate, a financial solvency letter from an accountant, and details of business operations, and comply with employment laws and safety standards. Regularly renew the licence annually.
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