Labour Hire Licensing Bill

Second Reading

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Climate Change) (17:37): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and explanation of clauses inserted in Hansard without my reading it.

Leave granted.

On 10 July 2017, the Government announced it was drafting a Bill to introduce a state-based licensing scheme for labour hire providers.

The Labour Hire Licensing Bill 2017 seeks to establish a scheme that will make it unlawful to operate as a labour hire provider without a licence and for employers that engage labour hire workers to use an unlicensed operator.

On 4 May 2015, the ABC Four Corners program aired an investigative report regarding the alleged exploitation and underpayment of migrant workers employed at various companies in Australia, including two in South Australia. The principal focus of the Four Corners story was labour hire companies exploiting migrant workers on farms and in the food processing industry.

In response to the Four Corners program, the Premier announced that he had asked the Parliamentary Economic and Finance Committee to look into the labour hire industry, including underpayment of wages, harassment and mistreatment of workers.

The Economic and Finance Committee handed down its report (the Report) on 18 October 2016.

A total of 13 submissions were received by the Committee from various parties, including government departments, industry groups and unions. In addition, witnesses representing different organisations. Written requests were made by the Committee to three Commonwealth departments and agencies. The Committee also held a public hearing in the Riverland region and visited several companies who engage labour hire workers.

At the public hearings the Committee heard from three private citizens with first-hand experience of exploitation in the labour hire sector. They relayed to the Committee their experiences of being underpaid wages, receiving no superannuation and the troubles they faced trying to recover their entitlements with the individuals that operated the labour hire services dissolving the entity they were employed by and starting up new entities and continuing to operate.

The Report made seven recommendations, including that, in the absence of the Federal Government establishing a national licensing scheme, the South Australian Government institute a State-based licensing scheme.

Inquiries into the labour hire industry were also completed by Queensland, Victoria and the Commonwealth. Each of those inquiries recommended some form of licensing or registration scheme for labour hire providers.

The Commonwealth Government's current policy is focussed on compliance and enforcement, as opposed to the introduction of a licensing requirement.

In the absence of the Commonwealth Government having the courage, through a national licensing scheme, to stand up to protect the rights of labour hire workers, many of whom are the most vulnerable in our community, this Weatherill Labor Government has drafted the Labour Hire Licensing Bill.

The objectives of this Bill are to protect workers from exploitation, to protect licensed labour hire businesses from predatory business practices that may be engaged in by persons unsuitable to be licensed to provide labour hire services and in achieving this it will improve the integrity of the labour hire industry.

Rogue operators are underpaying workers, failing to ensure proper safety standards and abuse worker visas. These actions undermine minimum standards of employment for workers and undercut those businesses doing the right thing.

Every inquiry in this area has highlighted the issue of 'phoenixing'. This is where people avoid legal obligations such as wages, superannuation, tax, workers' compensation and the most basic of working conditions by winding up dodgy companies and re-incorporating them under a new name.

It is critical that we crack down on dodgy operators exploiting workers and driving honest employers to the wall. That is why we must establish this scheme, because not only will it protect labour hire workers and the labour hire industry by keeping rogue operators from entering the market but it will also aid regulators with their compliance activities.

The Bill provides for two key elements. First, labour hire providers must be licensed in order to operate and supply labour in South Australia. To be licensed, a labour hire provider will be required to establish that they are a fit and proper person to run a labour hire business.

Second, persons who engage labour hire providers must only engage a licensed labour hire provider. Users of labour hire will be able to check an online register to help them identify and use legitimate labour hire providers.

Importantly, workers will be able to check if a labour hire company is legitimate and law abiding before accepting work.

The scope of the bill is deliberately wide both in terms of the industries that are covered and the types of labour hire arrangements. The licensing scheme is not industry or sector specific and will apply to any labour hire arrangements in South Australia.

This deliberately broad approach keeps in scope a range of arrangements which people might enter into which would be considered labour hire by a reasonable person.

In Australia, the typical labour hire employment arrangement is a triangular relationship between the worker, provider, and the client that a worker is supplied to, as well as variations on this model which can be used to disguise labour hire arrangements. The arrangement generally involves a labour hire company providing a worker to a host employer under the following conditions:

The worker performs duties at the host employer's premises or worksite under the practical day-to-day direction of the host employer;

The worker uses the host employer's tools and equipment and in many cases wears the host employer's uniform;

The worker is paid by the labour hire company and has a direct employment or contractual relationship with the labour hire company;

The host employer pays a contract fee to the labour hire company for the provision of the worker's labour and, accordingly, the host employer has a contractual relationship with the labour hire company.

The definition in the Bill is designed to capture the triangular labour hire relationship between the worker provider and the end user or client that a worker is supplied to, as well as variations on this model which can be used to disguise labour hire arrangements.

To make it clear, businesses that undertake recruitment leading to direct employment or permanent job placement, genuine independent contracting arrangements and workforce consulting services are not in the scope of the bill, neither is work experience or student practical placements organised by an educational institution as part of a course.

The bill includes a regulation-making provision that can deal with other arrangements which are genuinely not within the scope of labour hire. In this way the bill provides avenues for the scheme to respond to other scenarios where necessary, to provide further clarification on the scope of the scheme.

The reputation of good, law-abiding labour hire companies is being tarnished by those dodgy companies that continue to exploit their workers and undercut reputable businesses.

A broad scope and a definition of labour hire is necessary and appropriate to achieve the purpose of the scheme. Once you narrow the scope of the scheme, you simply create loopholes for unscrupulous labour hire operators to avoid coverage, and that is not an outcome that we are prepared to accept.

There is a need for increased cooperation between State and Federal Governments. We will continue to push for a national licensing scheme.

However, in the meantime, and in the absence of any meaningful action by the Federal Government, South Australia along with other States will introduce a complementary licensing scheme.

I commend the Bill to members.

Explanation of Clauses

Part 1—Preliminary

Division 1—Preliminary

1—Short title

This clause provides the short title.

2—Commencement

This clause provides for commencement to be fixed by proclamation.

Division 2—Objects and application of Act

3—Objects of Act

This clause provides for the objects of the measure which will be achieved primarily by establishing a licensing scheme to regulate the provision of labour hire services. The objects of the measure are to—

(a) protect workers from exploitation by providers of labour hire services; and

(b) protect licensed labour hire businesses from predatory business practices that may be engaged in by persons unsuitable to be licensed to provide labour hire services; and

(c) promote the integrity of the labour hire industry.

4—Extraterritorial application

This clause indicates that the measure is intended to have extraterritorial application to the extent that the legislative powers of the State permit.

Part 2—Interpretation

5—Interpretation

This clause provides defined terms for the purposes of the measure.

6—Meaning of labour hire services

This clause provides for a definition of labour hire services, whereby a person provides labour hire services if, in the course of carrying on a business, the person supplies, to another person, a worker to do work. Worker is defined in clause 7.

7—Meaning of worker

This clause provides for a definition of worker, whereby an individual is a worker for a person if the individual enters into an arrangement with the person under which—

(a) the person may supply, to another person, the individual to do work; and

(b) the person is obliged to pay the individual, in whole or part, for the work.

8—When a worker is supplied

For purposes of the measure, the supply of a worker to do work for a person commences when the worker first starts to do work for the person in relation to the supply.

9—Fit and proper person

This clause makes provision in relation to determining whether a person is a fit and proper person for the purposes of the measure.

Subclause (1) lists a number of matters that may be relevant in determining whether a person is a fit and proper person to be the holder of a licence or a fit and proper person to be the director of a body corporate that is the holder of a licence, such as the reputation, honesty and integrity of the person or demonstrated compliance by the person with relevant laws.

Subclauses (2) and (3) list the circumstances in which a person will be taken to not be a fit and proper person to be the holder of a licence or a fit and proper person to be the director of a body corporate that is the holder of a licence. Examples include if a person has been found guilty or convicted of an offence prescribed by the regulations or if a person is a member of, or a participant in, a prescribed organisation.

Part 3—Prohibited conduct

10—Licence required to provide labour hire services

This clause provides that a person must not provide labour hire services except as authorised by a licence.

This clause also provides that a person must not advertise, or in any way hold out, that the person provides, is entitled to provide or is willing to provide labour hire services unless authorised to provide labour hire services by a licence.

11—Person must not enter into arrangements with unlicensed providers

This clause provides that a person must not, without a reasonable excuse, enter into an arrangement with another person for the provision of labour hire services to the person unless the other person is authorised to provide labour hire services by a licence.

12—Person must not enter into avoidance arrangements

This clause provides that a person must not enter into an arrangement designed to circumvent or avoid an obligation imposed by the measure (an avoidance arrangement).

13—Persons must report avoidance arrangements

This clause provides that if a person to whom another person has supplied, or intends to supply, a worker becomes aware, or ought reasonably to have become aware, that the arrangement for the supply of the worker is an avoidance arrangement, the person must notify the Commissioner in writing of the name of the non-complying person along with a brief description of the avoidance arrangement.

Part 4—Licences

Division 1—Application and grant

14—Application for licence

This clause provides for applications to the Commissioner for a licence authorising the provision of labour hire services which must—

(a) be in a form approved by the Commissioner; and

(b) specify the names of the person or persons nominated to be responsible persons for the purposes of the licence; and

(c) include the information required by the Commissioner to determine the application; and

(d) be accompanied by the prescribed fee.

Notice of each application for a licence under the clause must be published by the Commissioner on a website determined by the Commissioner.

The clause further provides that—

(a) a person who has applied for and been refused a licence may not apply for a period of 3 months from the date of notice of the refusal or the date on which an appeal against the refusal was finally determined; and

(b) a person who has previously held a licence that has been cancelled may not apply for a period of 2 years from the date of the cancellation,

unless the person is a body corporate and, since the time of the refusal of the licence or the cancellation, no person who held shares, a beneficial interest or was in a position to control or influence the affairs of the body corporate at that time holds shares or a beneficial interest or is in a position to control or influence the affairs of the body corporate at the time of a new application for a licence.

15—Objection to application

This clause provides that a designated entity may, by notice in writing, lodge with the Commissioner an objection to an application for a licence on the grounds that the applicant is not a fit and proper person to be the holder of a licence or, in the case of a body corporate, that 1 or more directors of the body corporate are not fit and proper persons to be directors of a body corporate that is the holder of a licence. The Commissioner is required to notify the applicant of a notice of objection and must, before granting a licence, consider both the objection and any response of the applicant.

In this clause—

designated entity means any of the following entities:(a)an industrial association (within the meaning of the Return to Work Act 2014);(b)an agency or instrumentality of this State or of the Commonwealth, another State or a Territory of the Commonwealth;(c)a council (within the meaning of the Local Government Act 1999).

16—Grant of licence

This clause provides that the Commissioner may grant a licence to an applicant if satisfied that—

(a) in the case of an applicant who is a natural person, the applicant—

(i) is a fit and proper person to be the holder of the licence; and

(ii) has sufficient financial resources for the purpose of properly carrying on business under the licence; or

(b) in the case of an applicant that is a body corporate—

(i) the body corporate is a fit and proper person to be the holder of the licence; and

(ii) each director of the body corporate is a fit and proper person to be the director of a body corporate that is the holder of a licence; and

(iii) the body corporate has sufficient financial resources for the purpose of properly carrying on business under the licence; and

(c) each person to be specified as a responsible person is a fit and proper person to be a responsible person.

17—Conditions of licence

This clause provides that a licence may be subject to such conditions as the Commissioner thinks fit and that such conditions may be imposed, varied or revoked by the Commissioner at any time after the grant of a licence.

Division 2—Duration of licences and reporting

18—Duration of licence, periodic fee and return

This clause provides that a licence remains in force until the licence is surrendered or cancelled or the licence holder dies or, in the case of a licensed body corporate, is dissolved.

The clause also provides that the holder of a licence must, after each reporting period for the licence (every 12 months)—

(a) pay to the Commissioner the fee prescribed by regulation; and

(b) lodge with the Commissioner a report in the form approved by the Commissioner containing the prescribed information as defined in the clause.

If the fee or the information return are not provided to the Commissioner, the Commissioner may require the person to make good the default. If, after 28 days of the notice to make good the default, the person has still not complied, the licence is automatically cancelled.

19—Notification of certain changes in circumstances

This clause provides that the holder of a licence must give the Commissioner notice of a change in respect of a prescribed matter relating to the licence within 14 days after the change. There is a proposed penalty of $4,000.

For the purposes of the clause, a prescribed matter, relating to a licence, is defined to mean a matter prescribed by regulation relating to—

(a) whether a person is a fit and proper person to be the holder of a licence; or

(b) whether a person is a fit and proper person to be a director of a body corporate that is the holder of a licence; or

(c) details about the licence shown on the register; or

(d) activities undertaken under or relating to the licence (such as, without limitation, accommodation provided by the holder of the licence for workers supplied to another person).

20—Provision of information

This clause provides that the Commissioner may require the holder of a licence to provide information to the Commissioner as the Commissioner requires relating to—

(a) the provision of labour hire services by the licence holder; and

(b) whether the holder of the licence is a fit and proper person to be the holder of a licence; and

(c) whether the licensee's business has sufficient financial resources for the purpose of properly carrying on business under the licence; and

(d) any other matters relating to the objects of this Act.

If the required information is not provided to the Commissioner, the Commissioner may require the person to make good the default. If, after 28 days of the notice to make good the default, the person has still not complied, the licence is automatically cancelled.

Division 3—Suspension, cancellation and surrender

21—Suspension and cancellation

This clause provides that the Commissioner may suspend or cancel a licence by notice in writing to the holder of the licence if the Commissioner is satisfied that—

(a) the licence was obtained because of materially incorrect or misleading information; or

(b) the holder of the licence has given materially incorrect or misleading information in a report under clause 18, 19 or 20; or

(c) the holder of the licence, or an employee or representative of the holder of the licence, has contravened a condition of the licence; or

(d) the holder of the licence, or an employee or representative of the holder of the licence, has failed to comply with, or has contravened or is contravening, a provision of the measure or the regulations; or

(e) the holder of the licence, or an employee or representative of the holder of the licence, has contravened or is contravening a relevant law; or

(f) the holder of the licence is no longer a fit and proper person to be the holder of a licence; or

(g) if the holder of the licence is a body corporate—

(i) 1 or more directors of the body corporate are no longer fit and proper persons to be directors of a body corporate that is the holder of a licence; or

(ii) the holder of the licence has been wound up or deregistered under the Corporations Act 2001 of the Commonwealth; or

(h) the business to which the licence relates no longer has sufficient financial resources for the purpose of properly carrying on business under the licence; or

(i) for any other reason, the licence should be suspended or cancelled.

22—Return of evidence of suspended or cancelled licence

This clause provides that, on the suspension or cancellation of a licence, the Commissioner may require the holder of the licence to return any evidence of the licence issued to the person within 14 days after receiving notice of the suspension or cancellation.

23—Surrender

This clause provides that the holder of a licence may surrender the licence by notice in writing to the Commissioner. The Commissioner may then require a person giving notice of surrender to return any evidence of the licence issued to the person within 14 days.

Division 4—Responsible persons

24—Requirements for responsible persons

This clause provides that a business conducted under a licence must, at all times during business hours, be personally supervised and managed by a natural person (a responsible person) who is responsible for the day-to-day management and operation of the business to which the licence relates.

A responsible person, for a licence, must—

(a) be a fit and proper person to be a responsible person; and

(b) satisfy any other requirements prescribed by regulation.

25—Responsible person must be reasonably available

This clause provides that the holder of a licence must ensure that each responsible person for the licence is reasonably available to be contacted by the Commissioner, an authorised officer or a member of the public during business hours. A maximum penalty of $4,000 applies in the case of non-compliance with this requirement.

26—Application to change responsible person

This clause provides for the responsible person under a licence to be changed on application to the Commissioner who may approve the change if satisfied that the proposed responsible person is a fit and proper person for that role.

27—Substitution of responsible person for limited period

This clause provides for the temporary appointment of a person to be a responsible officer in the absence of the designated responsible officer. Notice of such an appointment must be given to the Commissioner who may cancel the appointment if satisfied that the person is not a fit and proper person to be a responsible person.

Part 5—Monitoring and enforcement

Division 1—Referral to Commissioner of Police

28—Commissioner may refer matters to Commissioner of Police

This clause provides that the Commissioner may refer certain matters to the Commissioner of Police who must provide information of criminal convictions relevant to a matter and may provide other information relevant to the referred matter (such as whether an application should be granted or a person is a fit and proper person).

29—Criminal intelligence

This clause provides for the protection and confidentiality of information provided to the Commissioner by the Commissioner of Police that is classified by the Commissioner of Police as criminal intelligence.

Division 2—Authorised officers

30—Authorised officers

This clause provides for the appointment of authorised officers by the Commissioner.

31—Obtaining information

This clause provides that an authorised officer may require a person—

(a) to answer any questions, orally or in writing; or

(b) to produce books or documents.

For such purposes, an authorised officer may require a person to attend at a specified time and place.

32—Entry and inspection

This clause provides for authorised officers to have certain powers of entry and inspection.

33—Use and inspection of books or documents produced or seized

This clause provides that a book or document seized by an authorised officer may be retained for the purpose of enabling the book or document to be inspected and enabling copies of, or extracts or notes from, the book or document to be made or taken by or on behalf of the Commissioner.

34—Hindering an authorised officer

This clause provides that a person who hinders an authorised officer acting in the exercise of powers conferred by or under the measure is guilty of an offence for which a maximum penalty of $10,000 applies.

35—Offence relating to intimidation

This clause provides that a person must not persuade or attempt to persuade by threat or intimidation another person to fail to comply with certain requirements of an authorised officer. A maximum penalty of $10,000 applies.

36—Impersonating an authorised officer

This clause provides that a person who falsely represents, by words or conduct, that the person is an authorised officer is guilty of an offence for which a maximum penalty of $10,000 applies.

Part 6—Proceedings, review and appeal

37—Evidentiary provisions

This clause provides certain evidentiary provisions for the purposes of proceedings under the measure.

38—Appeal to District Court

This clause provides for appeals to the Administrative and Disciplinary Division of the District Court against certain decisions made under the measure.

Part 7—Miscellaneous

39—The register

This clause provides that the Commissioner must maintain a register of licences granted under the measure. The clause specifies the matters that must be included on the register.

40—Delegations

This clause provides for the Commissioner to be able to delegate any of the Commissioner's functions or powers under the measure to—

(a) a person employed in the Public Service; or

(b) the person for the time being holding a specified position in the Public Service.

41—Commissioner may rely on licence, approval etc under prescribed law

This clause provides that the Commissioner may, if satisfied that a person is the holder of a licence, or is otherwise accredited or approved (however described), under a prescribed law, dispense with a requirement to provide certain information to the Commissioner under the measure and may act on the basis of that other licence, approval or accreditation to determine, without any further consideration, that the person is a fit and proper person or has sufficient financial resources for the purpose of properly carrying on business under a licence.

42—Exemptions

This clause provides for the Commissioner to grant exemptions to a specified person or person of a specified class.

43—False or misleading information

This clause provides an offence of making a statement that is false or misleading in a material particular (whether by reason of the inclusion or omission of any particular) in any information provided, or record kept, under the measure.

44—Vicarious liability

This clause provides for vicarious liability for the principal of a business, or the directors of a body corporate, where an offence is committed by an employee or agent of the business or by the body corporate. This vicarious liability also extends, where an offence is committed against the measure in relation to the formation of a contract, to a person who has derived or would, if the contract were carried out, expect to derive a direct or indirect pecuniary benefit from the contract.

45—Defences

This clause provides defences of reasonable mistake and reasonable reliance on information supplied by another person. A further defence is where a contravention is due to the act or default of another person, to an accident or to some other cause beyond the defendant's control and the defendant took reasonable precautions and exercised due diligence to avoid the contravention.

46—Confidentiality of information

This clause provides for the confidentiality of information obtained in exercising a power or function under the measure.

47—Service

This clause provides for service of a notice or document required or authorised to be given to a person for the purposes of the measure, which may—

(a) be given to the person personally; or

(b) be posted in an envelope addressed to the person at the person's last known residential, business or (in the case of a corporation) registered address; or

(c) be left for the person at the person's last known residential, business or (in the case of a corporation) registered address with someone apparently over the age of 16 years; or

(d) be transmitted by fax or email to a fax number or email address provided by the person (in which case the notice or document will be taken to have been given or served at the time of transmission).

Also, this clause provides that a notice or other document required or authorised to be given or sent to, or served on, a person for the purposes of the measure may, if the person is a company or registered body within the meaning of the Corporations Act 2001 of the Commonwealth, be served on the person in accordance with that Act.

48—Regulations

This clause provides that the Governor may make such regulations as are contemplated by the measure or as are necessary or expedient for the purposes of the measure.

Schedule 1—Repeal and transitional provisions

1—Transitional provision

This clause provides a transitional period of 6 months for persons providing labour hire services at the commencement of the Act.

2—Transitional regulations

This clause provides that the Governor may, by regulation, make additional provisions of a saving or transitional nature consequent on the enactment of the measure.

Debate adjourned on motion of Hon. D.W. Ridgway.