Common misconceptions surrounding labour hire licensing obligations

False beliefs or inaccuracies regarding responsibilities outlined in the Labour Hire Licensing Act 2018 (Vic) have the potential to endanger both employees and enterprises.

Misconceptions often arise from either a misinterpretation or a lack of understanding regarding obligations outlined in the Act. However, they can also be deliberately propagated by industry operators or advisors with dishonest intentions.

Both providers and hosts must comprehend their obligations, as the penalties for engaging in or providing unlicensed labour-hire services can be severe, reaching up to $600,000 for corporations and $150,000 for individuals.

The Labour Hire Authority (LHA) consistently offers accurate information regarding licensing obligations. This information is disseminated through various channels, including advice and case studies on the LHA website.

While LHA cannot provide legal or financial advice tailored to specific circumstances, seeking reputable business advice should be a top priority for any business.

Can you supply workers while waiting for a license application to be granted?

For a new application, you can’t deploy workers until your license is officially granted, merely applying isn't sufficient.

The Labour Hire Authority (LHA) has witnessed instances where providers have supplied workers while awaiting the processing and approval of their labour-hire license application.

This practice is illegal, businesses cannot engage in supplying workers or promoting labour hire services until the license is officially granted. Hosts who engage with such labour-hire providers would also be violating the Act and could face similar penalties.

In the case of renewal applications, if the application has been submitted before the expiration of the current license, providers can continue supplying workers while awaiting a decision on the application.

To avoid the risk of significant penalties, labour hire providers should:

• Apply for a labour-hire license at least two months before intending to advertise their services, ensuring ample time for processing.

• Refrain from advertising labour hire services until the license is officially granted.

• Submit a renewal application well in advance of the license expiry—up to six months beforehand. By renewing early, providers can mitigate the risk of non-compliance and operational disruptions.

Providers can mitigate non-compliance risk and ensure continuous operation without interruption by initiating the renewal process ahead of schedule.

Subcontracting - Who needs a license?

Subcontracting to other labour-hire providers is a prevalent practice in the labour-hire sector.

A common misconception suggests that if the head contractor in a supply chain holds a labour-hire license, subcontractors who supply workers to the end host through this primary contractor are exempt from needing a license themselves.

This notion is incorrect, every business involved in the supply chain must hold a labour-hire license, whether they supply workers directly or through an intermediary.

Can I use someone else’s labour-hire license?

Simply put, no you cannot.

Every business that supplies workers to a host must have its labour-hire license, it is fraudulent to represent to a host that you can hold a labour-hire license belonging to another business, and it can carry serious penalties and consequences. 

Companies can be prosecuted for providing labour-hire services without a license, and you might even be subject to criminal prosecution. 

How can hosts spot a provider doing the wrong thing?

Hosts must have a dependable method to verify a provider's license status and know the appropriate steps to take if they detect any misconduct.

Relying solely on paper documents to authenticate a license is risky, as it's relatively easy for dishonest providers to manipulate paper certificates.

Always use the tools on the Labour Hire Authority (LHA) website to ensure providers have a valid licence:

• Check a provider is licensed using LHA’s Register of Licensed Providers

• Stay up to date on any changes to a provider’s licence status using - follow my providers

• Report any suspected non-compliant or unlawful activity, such as if a provider’s bank details regularly change on invoices, using the report a problem tool

Ensure you establish a written contract with your provider that accurately identifies their identity. This contract should also contain a clause obligating them to promptly inform you of any alterations in business ownership, changes in license status, or any issues concerning compliance with regulations. You can verify the validity of the Australian Business Number (ABN) they provide by utilising ABN Lookup.

Additionally, it's prudent to verify the identity of the individual you're engaging with and cross-reference it with the license register to confirm if they are listed as the designated officer for the license. If they aren't listed, request evidence demonstrating their authorisation to represent the labour-hire provider.

Hosts should also be wary of providers who frequently change their name, ABN, or banking information, as this can indicate non-compliance issues.