The end is in sight for dodgy labour hire contractors

Karyn Starmer 20 September 2021 3
Ian Lindgren from PayMe

Ian Lindgren from PayMe says the solution is to stop using contracts that mischaracterise the payroll services company as a supplier of labour. Photo: Supplied.

New ACT labour-hire laws designed to protect contract workers and weed out dodgy providers are set to come into force later this month.

Under the new laws, labour-hire providers in the ACT will need to apply for licences to operate as part of a range of strict new measures designed to better protect workers.

The new laws come in response to unacceptable practices carried out by providers in the industry. The Labour Hire Licensing Bill passed the ACT Parliament on 21 May 2020.

The ACT Minister for Industrial Relations and Workplace Safety Mick Gentleman has now confirmed the new scheme will commence on 27 May 2021.

The new labour-hire licensing scheme will require all labour-hire providers to demonstrate that they are meeting their workplace obligations and responsibilities to be licensed to continue operating in the ACT.

“Under the new scheme, labour-hire companies will be forced to demonstrate their compliance with industry standards and workplace laws. A public register will also be set up for businesses and workers to know which labour-hire services are compliant with the new scheme,” Mr Gentleman said.


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Applications for an ACT labour-hire licence may be made from 27 May 2021, with a six-month transition period applying to allow providers to get ready and obtain a licence to continue to operate labour-hire services in the ACT. During the transition period, penalties and offences under the new scheme would not apply.

Labour hire licences will be valid for a 12-month term, and licensees must seek renewal of their licence and pay the relevant licence fee every 12 months.

A ruling in a recent worker’s compensation case highlighted the urgent need for the new scheme: casual labour-hire employees may not be covered by a valid worker’s compensation insurance policy if a labour-hire contractor names a payroll company as their employer.

Following the hearing of a refused worker’s compensation case in the ACT Industrial Magistrates Court in November last year, the magistrate established that the injured worker’s employer was the recruitment company and not a payroll company.

The labour-hire company had recruited the contractor and operated as the employer by setting wages, retaining the right to hire or fire the contractor and gave all instructions regarding day-to-day activities under the contract. The payroll company had only performed a financial service for both the contractor and the labour-hire entity.


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PayMe Group Executive Chairman Ian Lindgren says these type of multi-party labour-hire arrangements do not accurately reflect the true nature of the business relationship between the labour-hire company and the outsourced payroll provider, saying it also mischaracterises the true nature of the employment relationship between the labour-hire company and its casual employee.

“The solution is for labour-hire companies to engage payroll companies to provide payroll services and to cease the use of contracts that mischaracterise the payroll services company as a supplier of labour,” Mr Lindgren said.

The Minister says the new legislation will address this issue.

“All employers must have a workers’ compensation policy that covers their employees in the event of a work injury. The labour-hire licensing scheme will verify that relevant employers have the right workers’ compensation cover,” Mr Gentleman said.


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The new licensing scheme will be administered by WorkSafe ACT, including issuing licenses under the scheme and compliance and enforcement activities to ensure providers are properly licensed.

“Under the new scheme, a range of regulatory tools for compliance and enforcement will be available for labour-hire providers that are found not to be complying with workplace laws and standards. A publicly available licence register will also be established to enable businesses, workers and the community to know if they are dealing with a licensed labour-hire provider.”

Mr Gentleman has advised that WorkSafe ACT will begin communication with labour-hire providers shortly.


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3 Responses to The end is in sight for dodgy labour hire contractors
Ian Lindgren Ian Lindgren 6:51 pm 06 May 21

These comments by the The ACT Minister for Industrial Relations and Workplace Safety Mick Gentleman mean that it’s time all recruitment companies operated compliant with all employment laws to ensure a safe working environment for ACT contractors.

If you are a recruitment company, a consulting firm, or a multinational aerospace company, and you have a contract to supply casual labour hire workers, then you are a labour hire company no matter what the name of your business. This means you are the employer of the casual labour hire people you supply to your client.

The changes mean that the obligations of the employer cannot be “contracted away” and forced on a payroll company as they have in the past. These actions leave workers unable to identify their true employer and in many cases without an employment contract. They work until something fails and then it does not stand up in court.

The ACT Magistrates Court determination was clear that these contracts deliberately attempt to misrepresent the true nature of the employment relationship. The worker in question went six months without any workers comp payments because workers compensation insurance provided by a payroll company in the ACT is void unless is supplies a worker directly to its client. Not through a labour hire firm.

There is a need for labour hire firms and a need for payroll companies. There is no need for contractors to go through great angst and expense because they are abandoned by their employer.

Almost every contract in the ACT, and in Australia for that matter, between a labour hire company and a payroll company is a sham contract and attempts to transfer the responsibility of the employer away from the recruitment company. It’s simple to resolve in order to be compliant with the new laws by engaging the payroll company as a payroll provider. Do not try to mischaracterise them as an employer of your workers.

Thete is a six month transition period as arrangements are changed, so there is no need for alarm. This will keep contractors safe in terms of who their employer is. However if you go through a recruitment company and have workers compensation provided by a payroll company in the ACT, that should be a concern to you because it it likely to be void if you are injured. PayMe does not provide workers compensation insurance in the ACT because it is not permitted to. If it did it would be void. If you want to know more contact me to find out why this is important to you. Ian.lindgren@payme.com.au.

Kevin Hodder Kevin Hodder 5:38 pm 06 May 21

How about a crack down on government agencies waisting tax payer funds,

Guy Noble Guy Noble 4:49 pm 06 May 21

Rose cleaning might be worth a look if they havnt changed there practices

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