Labour Hire Authority powers to be strengthened to address unlawful conduct in Victoria’s construction industry, following government review

6 February 2025
Labour Hire Authority powers to be strengthened to address unlawful conduct in Victoria’s construction industry, following government review

The Victorian Government has announced that the Labour Hire Authority’s (LHA) regulatory powers will be strengthened to further address unlawful conduct in the construction industry.

The announcement came in response to the Formal Review into the Victorian Government Bodies’ Engagement with Construction Companies and Construction Unions.

The Government committed to support all recommendations – either in principle or in full. In summary, this includes legislative changes to:

  • add circumstances in which a person may not be a ‘fit and proper person’ to operate a labour hire business, including where a close associate is not fit and proper
  • specifically define work activities related to construction that will be considered labour hire to make it clearer which businesses require a licence and to enhance LHA’s capacity to regulate the construction industry
  • strengthen LHA’s powers to request information to support compliance monitoring
  • broaden LHA’s ability to publish contextual information around licensing actions – such as the circumstances that led to a licence cancellation – to promote compliance with the Labour Hire Licensing Act 2018 (Vic) and educate labour hire providers and hosts.

The review also recommended the establishment of an alliance of state and federal regulators, law enforcement and other entities with a role in addressing allegations of criminal or unlawful conduct on Victorian government construction sites. LHA will be part of this alliance to share information, coordinate action and inform government of emerging issues on these sites.

In addition, there is a recommendation to require principal contractors operating at Victorian Government-funded construction projects to report any unlawful behaviour by providers to a new complaints referral body.

“We welcome these recommendations and look forward to continuing our work to improve the integrity of the labour hire industry,” said Labour Hire Licensing Commissioner, Steve Dargavel.

“The Labour Hire Authority has undertaken strong licensing actions and prosecutions within the construction industry to date – these recommendations will further support our work to protect workers and create a level playing field for businesses doing the right thing,” said Commissioner Dargavel.

The Review’s recommendations will be reviewed after two years. The report and Government response, both published in mid-December 2024, are available on the vic.gov.au website.

Labour hire in construction

The construction industry is the fourth largest employer in Victoria and contributes to the development of essential transport infrastructure, as well as industrial, commercial and residential buildings.

Labour hire has been a significant feature of the construction industry for decades, and businesses that supply labour hire workers to construction sites must comply with their legal obligations under the Act.

LHA has taken a range of actions against labour hire providers in Victoria’s construction industry to date, including as of November 2024:

  • refusing 32 licence applications
  • cancelling 115 licences
  • prosecuting unlawful behaviour.

In September 2024, the Supreme Court of Victoria issued a total of $759,674 in penalties to five companies and three company directors for their involvement in unlicensed labour hire operations in the construction industry.

The penalties were issued to the companies and individuals reflecting unlawful conduct across multiple layers of subcontracting.

The Supreme Court of Victoria held that a construction company had engaged two companies to supply workers, which engaged two further companies to supply workers, and that none of the companies held a labour hire licence.

LHA Construction Taskforce

Following high-profile allegations of unlawful behaviour within the construction industry in 2024, LHA launched a dedicated internal construction taskforce to strengthen its capacity to identify and investigate non-compliance in the industry and enforce compliance.

This taskforce works closely with a range of primary regulators and law enforcement to detect, disrupt and deter non-compliance within the labour hire industry, through:

  • sharing data and intelligence
  • collaboration when assessing licence applications
  • compliance monitoring and investigations
  • joint field activities.

With some labour hire providers operating in multiple states and territories, LHA often works with other licensing authorities where licensing schemes are in place.

Labour hire licensing obligations in the construction industry

Businesses that supply labour hire workers, including those in the construction industry, must be licensed to operate in Victoria.

Host businesses must only source labour hire workers through licensed labour hire providers.

Under the Act, penalties for using or providing unlicensed labour hire services can exceed:

  • $630,000 for a corporation
  • $150,000 for an individual.

Labour hire providers must also be run by fit and proper persons and comply with relevant laws. Non-compliance can lead to actions including refusals of licence applications, imposing licence conditions, or suspending or cancelling licences.

Businesses should use the tools on the LHA website to ensure providers have a valid licence: 

As well as prosecuting contraventions of the Act, LHA can prevent labour hire providers from operating in Victoria by refusing, suspending or cancelling licences.