Widespread Crackdowns on Dodgy Labour Hire Companies

Source: Workplace Info

South Australia has announced it will introduce legislation to weed out “dodgy” labour hire companies and to make the labour hire industry safer.

The state government will introduce a state-based licensing scheme that would make it unlawful to operate as a labour hire provider without a licence. Significant penalties may be introduced for employers that use unlicensed labour hire companies.

This will hold the labour hire industry accountable if a company, for example, breaches work health and safety regulations.

Other measures that may be included in the draft bill are a ‘fit and proper person’ test for owners and directors, annual reporting requirements and a fee to partially fund compliance and enforcement.

“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,” Attorney-General John Rau said.

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

Crackdowns across Australia

Across Australia, there is increasing focus on the workplace practices of labour hire companies, which commonly employ migrant workers to work in low pay conditions.

Queensland has already introduced the Labour Hire Licensing Bill 2017 to require labour hire companies to obtain a licence and demonstrate compliance with WHS, workers compensation and other employment laws.

The Victorian government is also establishing a state-based scheme, with key measures to be introduced including:

  • setting up a licensing scheme and developing a code of conduct to regulate labour hire operators
  • making it unlawful for employers in regulated industries to use unlicensed labour hire firms
  • advocating for a national licensing scheme for labour hire operators
  • increasing OHS requirements and regulation of accommodation standards
  • amending the Equal Opportunity Act to ensure it applies to labour hire employees to prevent discrimination

These changes come after a series of enforcement actions by the Fair Work Ombudsman (FWO) against dodgy labour hire companies found to be exploiting migrant workers. In June 2017, the FWO instigated a national inquiry into the exploitation of overseas workers on Australian farms, after a Queensland labour hire operator was penalised $102,000 for underpaying 144 employees. The FWO have also been successful in penalising a NSW cleaning company for treating migrant employees as “slaves” and conducting “dubious labour hire arrangements”.

[Read our related article: $447,300 Penalty For Cleaning Company Treating Migrant Workers As “Slaves.]

 What can your business learn from this?

These crackdowns and new labour company licencing laws are a timely reminder for organisations with complex corporate structures or that use labour-for-hire companies to ensure that such arrangements do not breach their workplace obligations to their workers, including their obligation to ensure employees have a valid visa and rights to work, are paid minimum award rates and receive their statutory entitlements.

Sanctions against employers who breach fair work or migration laws can be significant and are cumulative.

[See our related article: Know your employee’s work rights which includes a checklist for managing compliance with migration rules.]

It is becoming increasingly likely that individuals such as company directors or operational staff will be held responsible for breaches of fair work, migration and other workplace laws. In the Sydney Cleaning Company case, the vulnerability of migrant workers was an aggravating factor leading to higher penalties and findings of personal, accessorial liability for the individuals concerned.

Also, some of the recent case law shows that it is not only possible but highly likely that the regulator will obtain freezing orders to prevent unscrupulous operators from dodging liability for worker entitlements.

Do you need assistance?

Prevention is better than cure when it comes to workplace compliance. Employers seeking assistance with visa and work rights issues are encouraged to get in touch with our business migration specialists who can assist with health checks, audits and monitoring activities.

Call us on (02) 8896 6056 or send us an email info@themigrationagency.com.au.

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