Labour Hire Licensing (Miscellaneous) Amendment Bill

Second Reading

The Labour Hire Licensing (Miscellaneous) Amendment Bill 2020 amends the Labour Hire Licensing Act 2017, which hereafter I will refer to as 'the act', introduced by the former government. Following consultation with various stakeholders and members of the parliament, the bill I introduce here proposes amendments to narrow the scope of the scheme to target vulnerable workers in high-risk industries, which have been consistently identified in government reports.

The act currently requires anyone who provides labour hire in South Australia to be licensed; however, since the commencement of the licensing scheme, the government has received numerous complaints about the scheme's broad scope and application. Numerous submissions have been made, including from industry representative groups and small businesses, outlining their confusion, angst and concern in relation to the scheme.

Following a review of the submissions, it became apparent that the licensing scheme applies to a range of businesses that were not intended to be captured, as opposed to focusing on the exploitation of vulnerable workers in high-risk industries. These laws create an unnecessary layer of red tape for a number of industries well and truly beyond what is reasonably required. Some examples of the businesses that are currently captured but would not be under the revised bill include:

  • IT consultants being outsourced to various businesses;
  • dental labour hire businesses providing hygienists, dentists and receptionists;
  • legal firms engaging in labour hire by providing legal practitioners to work with other businesses as in-house counsel or barristers being sent to work for various clients;
  • universities sending academic staff to other educational institutions, as well as medical professionals being sent to act as lecturers at universities; and
  • church ministers being sent to other parishes where the resident minister is unavailable.

Accordingly, we now seek amendments to narrow the scope of the scheme to ensure that these laws apply specifically to labour hire providers operating within high-risk industries where workers are more vulnerable to exploitation, rather than capturing industries where there is no suggestion of worker exploitation occurring.

The industries prescribed arise from findings from the Migrant Workers' Taskforce, the Harvest Trail Inquiry, and the Victorian Inquiry into the Labour Hire Industry and Insecure Work. Consistent with work identified as high-risk, the bill proposes that the following be prescribed work for the purposes of the licensing scheme: horticultural processing work, meaning a variety of activities relating to the production or processing of fruit, vegetables, flowers and nuts, which includes berries, grapes and vines; secondly, meat processing work; thirdly, seafood processing work; fourthly, cleaning work; and, fifthly, trolley work.

The bill has also been improved following amendments from SA-Best that were incorporated into this version of the bill. I thank the Hon. Connie Bonaros MLC, in particular, for her thoughtful and considered approach to this issue. The effect of her changes means that new industries and activities under prescribed work can be done by regulation so that the government can swiftly address instances of worker exploitation that arise. Other amendments include:

  • prescribing specific work activities focusing on low-skilled work within the prescribed high-risk industries;
  • excluding in-house employees where individuals are engaged on a regular and systematic basis, to avoid capturing genuine employee arrangements rather than labour hire work arrangements;
  • removing all imprisonment penalties;
  • requiring labour hire providers to disclose certain information to their workers;
  • refining prescribed information that is required annually to focus on information relevant to compliance;
  • differentiating between licensees and responsible persons when considering whether a person is fit and proper (in relation to insolvency);
  • an evidentiary provision in relation to proceedings for an offence against the act, where an individual supplied by a provider is deemed to be a labour hire worker in the absence of proof to the contrary; and
  • better aligning annual reporting periods and payment of periodic fees with existing legislation administered by CBS.

The SA Labour Hire Taskforce that was recommended by the Economic and Finance Committee continues to meet regularly and comprises representatives of the Australian Taxation Office, SafeWork SA, ReturnToWorkSA, RevenueSA, Australian Border Force and Consumer and Business Services. The task force is supportive of the proposed amendments and the industry-specific approach. The government anticipates that these amendments will align closely with the future introduction of a national scheme and will enhance protections for our most vulnerable workers.

As I have said in the house in the past, if we see that reform is needed we will advance it in our state. We do not always wait for the national agenda, which sometimes moves at a glacial pace. We consider that these matters need to be clear for the implementation now and not inadvertently capture parties that have been referred to.

I stress to the house that the government intends to implement these reforms as soon as possible to avoid businesses that will no longer be required to be licensed having to pay the periodic annual fee for the forthcoming year. Small businesses that do not need to be licensed should not be subject to these fees, especially during these challenging times due to COVID-19. In the circumstances, I commend the bill to the house and seek leave to have the explanation of clauses inserted in Hansard without my reading it.

Leave granted.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Labour Hire Licensing Act 2017

4—Amendment of section 6—Interpretation

This clause amends section 6 of the Act as follows:

the definitions of labour hire services and labour hire worker are defined consequential on the amendments in clause 5 which substitutes the definitions currently in sections 7 and 8 of the Act;

a new definition of prescribed work is defined as cleaning work, horticultural processing work, meat processing work, seafood processing work and trolley work;

definitions of cleaning work, horticultural processing work, meat processing work, seafood processing work and trolley work are inserted.

5—Substitution of sections 7, 8 and 9

This clause substitutes sections 7 and 8 which provide for the definitions of labour hire services and labour hire worker respectively.

7—Meaning of labour hire services

This clause provides a broad starting point in subclause (1) for the definition of labour hire services in that a person provides labour hire services if—

in the course of conducting a business the person supplies, to another person (the host), an individual to undertake work; and

the individual is a labour hire worker for the person (the definition of labour hire worker is in proposed section 8).

However, the definition in subclause (1) is then narrowed by the exclusions in subclause (2). Subclause (2) provides that a person does not provide labour hire services in the following circumstances:

where an individual is supplied to a host to undertake work that is not undertaken as part of a business or commercial undertaking of the host;

where an individual is supplied to undertake work that is not prescribed work;

any other circumstances prescribed by the regulations.

Subclause (3) provides clarification on circumstances that might otherwise give rise to ambiguity.

8—Meaning of labour hire worker

This clause provides the definition of labour hire worker in subclause (1). An individual is a labour hire worker for another person if the individual enters into an arrangement with the other person under which—

the other person may from time to time supply, to a third person, the individual to undertake work; and

the other person is obliged to pay the individual, in whole or part, for the work (whether directly or indirectly through 1 or more intermediaries).

Subclause (2) then excludes the following from the definition—

an individual who is an in-house employee of the other person and is only supplied to a third person to do work on a temporary basis; and

an individual or a class of person prescribed by the regulations.

Under subclause (3), an individual is an in-house employee of another person if—

the individual is engaged as an employee by the other person on a regular and systematic basis; and

in the circumstances of the case, it is reasonable to expect that the employment will continue; and

the individual primarily performs work for the other person other than as a worker supplied to a third person to do work for the third person.

9—Meaning of supply

This clause includes a new provision that qualifies the concept of supply of an individual to undertake work for the purposes of the Act. Proposed section 9 provides that an individual is not supplied by a person (the first person) to undertake work for another person (the second person) where the 2 persons have entered into a contract for the performance of the work by the first person and the individual undertakes the work for and on behalf of the first person as an employee, agent or independent contractor of the first person.

This proposed new section also retains the current provision providing that the supply of a labour hire worker to do work for a person commences when the labour hire worker first starts to do work for the person in relation to the supply.

6—Amendment of section 10—Fit and proper person

Currently, section 10 of the Act provides that a person is a fit and proper person to be a responsible person if they are a fit and proper person to be the holder of a licence. This clause amends section 10 to separate the question of whether a person is a fit and proper person to be a responsible person. Specifically, this clause provides that a person is not a fit and proper person to be a responsible person if the person—

has been found guilty or convicted of an offence, or an offence of a class, prescribed by the regulations; or

is a member of, or a participant in, a prescribed organisation; or

is a close associate of a person who is a member of a prescribed organisation or is subject to a control order under the Serious and Organised Crime (Control) Act 2008.

7—Amendment of section 11—Licence required to provide labour hire services

This clause amends section 11 of the Act to remove the maximum penalty of imprisonment for 3 years that currently applies for the offence.

8—Amendment of section 12—Person must not enter into arrangements with unlicensed providers

This clause amends section 12 of the Act to remove the maximum penalty of imprisonment for 3 years that currently applies for the offence.

A further amendment makes it clear that the offence of entering into an arrangement for the provision of labour hire services where the person providing the services is not authorised by a licence to do so applies, without limitation, to a person irrespective of whether the person is—

the person to whom the labour hire services are to be provided under the arrangement; or

entering into the arrangement as an agent or intermediary of the person providing the labour hire services under the arrangement; or

the person providing the labour hire services under the arrangement.

9—Amendment of section 13—Person must not enter into avoidance arrangements

This clause amends section 13 of the Act to remove the maximum penalty of imprisonment for 3 years that currently applies for the offence.

This clause also inserts the words 'an individual to undertake work' consequential on the removal of the definition of worker by clause 5.

10—Amendment of section 14—Persons must report avoidance arrangements

This clause amends section 14 of the Act to insert the words 'an individual to undertake work' consequential on the removal of the definition of worker by clause 5.

11—Insertion of section 14A

This clause inserts a new section 14A which provides that the holder of a licence who supplies a labour hire worker to a host to undertake work, and any agent or intermediary who acts in respect of that supply, must, before the labour hire worker is supplied, take all reasonable steps to ensure that the host is provided with specified licence particulars (being particulars current at the time of their provision). Those particulars are the name and contact details of the holder of the licence, the name and contact details of each responsible person for the licence and the licence number.

12—Amendment of section 18—Conditions of licence

This clause amends section 18 of the Act to provide a mandatory condition for each licence, being a condition that the holder of the licence must comply with the requirements prescribed by the regulations for the provision of information to labour hire workers by persons who provide labour hire services. A penalty of a maximum fine of $4,000 for non-compliance with the new mandatory condition is proposed and an offence is expiable with an expiation fee of $300.

13—Amendment of section 19—Prohibition on licence transfer, sale etc

This clause amends section 19 of the Act to remove the maximum penalty of imprisonment for 1 year that currently applies for the offence.

14—Amendment of section 20—Duration of licence, periodic fee and report

Under section 20(2) as amended by this clause, the holder of a licence will be required to pay a prescribed fee, and to lodge a report with the Commissioner, at intervals prescribed by regulation. A new definition of reporting period is also inserted by this clause.

15—Amendment of section 21—Notification of certain changes in circumstances

This clause amends section 21 of the Act consequential on the new definition of labour hire worker inserted by clause 5.

16—Amendment of section 34—Authorised officers

This clause amends section 34 of the Act to provide that an authorised officer under the Fair Trading Act 1987 is taken to be an authorised officer appointed under the section.

17—Amendment of section 41—Evidentiary provisions

This clause inserts an additional evidentiary provision so that, in proceedings for an offence against this Act, where it is proven that a person, in the course of conducting a business, supplied an individual to another person to undertake work, it will be presumed, in the absence of proof to the contrary, that the individual is a labour hire worker for the person making the supply.