In Short
- To start a labour hire business in Victoria, you must obtain a Labour Hire Licence from the Labour Hire Authority.
- Compliance with workplace laws, fair pay, and safety standards is essential to avoid penalties.
- Robust contracts and policies help manage worker rights, client obligations, and legal risks.
Tips for Businesses
Before launching a labour hire business, ensure you meet licensing requirements and compliance obligations. Develop clear contracts to protect your business, set up fair worker agreements, and stay up to date with industry regulations. Seeking legal advice can help you navigate complex labour laws and reduce operational risks.
Table of Contents
- Recruitment or Labour Hire Business?
- Opportunities in the Labour Hire Market
- What is the Value of Labour Hire Services?
- Licensing Requirements for Labour Hire Businesses in Victoria
- How to Obtain a Labour Hire Licence
- What is a Labour Hire Agreement?
- General Legal Considerations for Your Labour Hire Business
- Shared Responsibilities in Labour Hire
- Workplace Policies and Employment Agreements
- Do I Need to Comply With Any Other Laws?
- Key Takeaways
- Frequently Asked Questions
If you are considering starting a labour hire business in Victoria, it is important to be aware of important legal considerations, such as operational licence requirements under the Labour Hire Licensing Act 2018. Additionally, you should ensure that you have well-drafted labour hire agreements and employment agreements in place. This article outlines the key legal factors to consider when starting a labour hire business in Victoria.
Recruitment or Labour Hire Business?
Recruitment businesses and labour hire businesses are similar in nature, as they both connect willing workers with businesses seeking labour. However, there are fundamental operational differences in recruitment and labour hire businesses. On the one hand, businesses looking to fill a role will usually provide recruitment agencies with a job description. A recruitment agency will then provide their client business with candidates who meet the criteria. The client business meets and selects a suitable candidate to engage as a new employee. At this point, the relationship between the recruitment agency and the candidate ends as the selected candidate becomes an employee of the client business.
Labour hire businesses, on the other hand, have an ongoing relationship with their candidates or workers. Workers will usually wear the host business’ uniforms and use the host business’ tools and resources. However, the workers remain directly employed by the labour hire business. The host business has obligations in relation to workplace health and safety and general workplace protections. However, the labour hire business ultimately bears the responsibility for ensuring both they and the host business comply with employment laws.
Opportunities in the Labour Hire Market
Starting a labour hire business in Victoria can be a lucrative venture, particularly with the growing demand for flexible workforce solutions. You might consider launching a labour hire business when you identify:
- a gap in the market for supplying workers to specific industries or sectors;
- opportunities to connect skilled workers with businesses needing temporary or project-based staff;
- a demand for managing complex staffing needs, including recruitment, payroll, and worker accommodation; and
- potential to assist companies in scaling their workforce quickly without long-term commitments.
What is the Value of Labour Hire Services?
When starting a labour hire business, it is valuable to understand the unique benefits you can offer to client companies. Your services can provide:
- cost-effective staffing solutions compared to traditional hiring methods;
- risk mitigation in workforce management and compliance;
- access to a pre-vetted pool of talent with diverse skill sets;
- scalability to meet seasonal or project-based demands; and
- expertise in navigating complex employment regulations and payroll processes.
Licensing Requirements for Labour Hire Businesses in Victoria
All labour hire providers must have, or have applied for, a labour hire licence. This licence is mandatory if you plan to supply workers to other businesses, recruit or place workers while managing their wages and accommodation, or oversee the contract performance of workers you place.
The licensing process ensures that your new labour hire business meets regulatory standards and complies with relevant laws. It is essential to establish a legitimate and compliant operation and avoid penalties. Securing this licence should be one of your first priorities.
How to Obtain a Labour Hire Licence
To obtain a licence, you will need to pass a ‘fit and proper test’ and show that you comply or plan to comply with workplace laws and labour hire laws.
Under the Labour Hire Licensing Act 2018 and regulations, you also need to provide annual reports on your activity to the Labour Hire Authority in Victoria.
You may also face substantial fines for operating without a licence, the maximum penalties being upwards of $120,000 for an individual as a sole trader and $500,000 for a corporation.
You can apply for a Labour Hire licence through the Labour Hire Licensing Online portal. There are two types of applications available through the portal:
- an individual application for businesses structured as sole traders; and
- an organisation application for companies.
Download this free Commercial Contracts Checklist to ensure your contracts will meet your business’ needs.
To submit your application, you will require information including but not limited to:
- personal details such as full name, address and date of birth (individual applicants must provide more information for police checks and companies must submit personal details of each officer);
- whether you are registered with the Australian Tax Office (ATO) and WorkSafe Victoria;
- the number of workers you expect to supply to hosts in the next 12 months;
- industrial instruments that will determine the terms and conditions of employment or engagement of your workers;
- whether your workers will hold temporary work visas and, if so, details including the number of workers who hold such visas and the types of visas they hold;
- the industry in which you intend to provide your labour hire services;
- whether you intend on providing transport or accommodation for your workers; and
- whether you or anyone connected to your application has or may have breached laws in relation to the labour hire industry, workplace laws or minimum accommodation standards.
The Labour Hire Authority will also conduct a ‘fit and proper person’ assessment for each relevant individual included in your application. To determine whether or not you are a fit and proper person, the Authority will consider a number of factors.
What is a Labour Hire Agreement?
A labour hire agreement is a written agreement that outlines the relationship between you and the host business to whom you supply workers. Similar to having a written employment agreement, a written labour hire agreement clearly sets out the rights, obligations and expectations of both you and the host business. In particular, the agreement should focus on:
- the performance of obligations and regular reviews;
- the process of requesting workers;
- legal obligations (e.g. in relation to employment laws);
- insurance requirements;
- resolving disputes; and
- invoicing.
Drafting a thorough labour hire agreement can help with minimising future disputes and your risk in relation to your legal obligations to your workers.
General Legal Considerations for Your Labour Hire Business
There are several legal requirements to satisfy to ensure compliance and protect your business. Beyond obtaining your labour hire licence, you will first need to secure an Australian Business Number (ABN) to register your business officially. In addition, you will need to develop comprehensive workplace policies and agreements that govern your employees’ conduct.
Shared Responsibilities in Labour Hire
When operating a labour hire business, there are responsibilities shared between your company and host employers. Both parties have a legal obligation to ensure the health and safety of labour hire workers. This means collaborating on risk assessments, providing adequate training, and monitoring workplace conditions. Before placing a worker, conduct a thorough assessment of the host’s workplace to identify potential hazards and ensure appropriate safety measures are in place.
Ongoing consultation with both the host employer and the placed workers is essential to maintain a safe working environment. Additionally, be aware of your role in facilitating the establishment of designated work groups and supporting health and safety representatives if requested by your workers.
While the host employer may control the day-to-day work environment, your company retains significant responsibilities for worker wellbeing and cannot contract out of these obligations. Regular communication and coordination with host employers are key to fulfilling your duty of care and ensuring compliance with occupational health and safety regulations.
Workplace Policies and Employment Agreements
Develop comprehensive workplace policies and employment agreements that govern your employees’ conduct and outline their rights and responsibilities, even when they are working at client sites.
An employment agreement is a legal agreement between your labour hire business and the workers that you provide to host businesses. It is important to clearly set out the relationship and rights between you and your worker and reduce the risk of a future dispute. Your employment agreements must cover key factors of the arrangement.
The relevant documents may include:
- anti-harassment and discrimination policies;
- IT usage guidelines;
- safety protocols and Workplace Health and Safety (WHS) compliance;
- payment terms and hours;
- leave entitlements (including annual, parental, long service, personal carer’s, and compassionate leave);
- termination procedures;
- public holiday entitlements;
- maximum weekly hours;
- requests for flexible working arrangements;
- notice of termination and redundancy pay; and
- Fair Work Information Statement.
Ensure these policies and agreements comply with the National Employment Standards (NES) and relevant workplace laws. While your workers may be placed with different host businesses, they remain under your employment. Therefore, your workplace policies, WHS obligations, and employment terms will likely continue to apply, and you retain responsibility for their wellbeing across various work environments.
Do I Need to Comply With Any Other Laws?
Additionally, you will need to declare that you have a business compliance plan in place that details how you will comply with relevant legal obligations and laws.
For example, these include:
- taxation laws;
- superannuation laws;
- occupational health and safety laws;
- workers compensation laws;
- labour hire industry laws;
- workplace laws;
- migration laws; and
- applicable minimum accommodation standards.
Key Takeaways
When operating a labour hire business in Victoria, it is important to adhere to the operational and licensing regulations. Further, you should also have well-drafted employment agreements and a labour hire agreement to protect your business and minimise risks.
If you have any questions or need assistance with drafting legal documents for your labour hire business, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
You must obtain a labour hire licence, pass a ‘fit and proper person’ test, and comply with workplace laws. Register your business with an ABN, submit annual reports, and follow taxation, superannuation, and occupational health and safety laws to operate legally.
A recruitment agency finds candidates for businesses and ends its involvement after placement. A labour hire business directly employs workers and places them with host businesses while managing payroll, compliance, and employment obligations. Workers use the host’s resources but remain employed by the labour hire business.
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