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 both. 

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 highly are 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

If you wish to run a labour hire business in South Australia, 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.

If you provide labour hire services without a licence from 1 November 2019, you may face some penalties.

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 do not need a labour hire licence;
  • where labour hire services is not a core function of the business. For example, if a medical centre occasionally provides doctors to work at a hospital, they do 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.

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 running well; and
  • meet the relevant knowledge and experience requirements, such as successfully completing certain courses or holding a current and equivalent interstate licence.

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 and compassionate leave;
  • community service leave;
  • long service leave;
  • public holidays;
  • 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. 

For example, because you are directly employing your workers, you must provide them with general employment standards under the NES. As your workers are engaged by host business, you may not be able to ensure they are not working over the maximum number of hours per week. To prevent breaching the NES, your labour hire agreement can require your host business to keep accurate and up-to-date timesheets.

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.

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. If you have any questions on starting a labour hire business, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page. 

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Casey D'Souza

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