• Compliance & enforcement

The Labour Hire Authority (LHA) Annual Report 2023-24 showcases the progress made towards its strategic objectives of creating and maintaining a fair and lawful labour hire industry in Victoria.

LHA refined its licence application assessment practices in 2023-24, to further ensure only fit and proper providers are permitted to be licensed in Victoria.

It is crucial that providers understand and are accountable for compliance with relevant workplace laws, including:

• occupational health and safety
• taxation
• superannuation
• migration and labour hire industry laws
• accommodation standards.

To prevent worker exploitation, LHA targets specific harms common within the labour hire industry when assessing licence applications and through compliance activities on licence holders.

LHA continues to expand its licence application assessment processes to identify applications that present a high risk of non-compliance by considering its intelligence holdings, a range of publicly available data, and information obtained from other Victorian, interstate, and Commonwealth agencies.

This risk-based and intelligence-led approach better equips LHA to refuse licence applications in identified cases, preventing unsuitable providers from providing labour hire services. LHA may also impose licence conditions on providers to help ensure they comply with their legal obligations to workers.

Licence fraud

An emerging risk identified by LHA in 2023-24 is an increase in alleged labour hire licence fraud, including persons:

• providing fabricated / doctored licences to hosts to create the illusion that the person is a licensed labour hire provider
• misrepresenting themselves in a contract with a host as being the director of a business that was on the register of licensed labour hire providers
• providing fabricated bank statements to hosts to mislead the host into thinking they were paying a business that was on the register of licensed labour hire providers, when in reality the payments were going to the account of an unlicensed provider
• providing fabricated taxation documents to hosts to mislead the host into thinking they were engaging a business that was on the register of licensed labour hire providers.

These examples involve criminal offences under the Crimes Act 1958 (Vic), including falsification of documents and obtaining financial advantage by deception.

In addition to taking enforcement action against unlicensed providers, LHA is working with other agencies to detect, deter and respond to licence fraud.

LHA has also educated host businesses about how to spot and avoid licence fraud during site inspections, engagement activities and through communications channels.

Hosts should not rely on paper documentation to check the validity of a licence – it is relatively simple for an unscrupulous provider to ‘doctor’ paper certificates.

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

• Check a provider is licensed using LHA’s Labour Hire Licence Register.
• Stay up to date on any changes to a provider’s licence status using Follow My Providers.
• Report any suspected non-compliant or unlawful activity, such as if a provider’s bank details regularly change on invoices, using the Report a Problem tool.

Harms associated with independent contractors

During the licence application process, LHA pays close attention to providers who supply or intend to supply workers as independent contractors, where there is a risk that those workers are misclassified.

Ensuring that labour hire providers correctly engage their workforce as either employees or independent contractors, and comply with all applicable workplace and taxation laws, continued to be a key focus of LHA’s Compliance and Enforcement Program 2023-24.

LHA undertook a range of compliance and licensing activities to help ensure that providers correctly classified their workers, particularly in industries where misclassification of workers as independent contractors is a high risk.

This risk increases in industries with relatively high labour input, relatively low wages and limited training, such as horticulture, commercial cleaning and security.

Labour hire workers may be misclassified if they are:

• engaged under an Australian Business Number (ABN)
• working as part of the labour hire provider or host’s business, rather than genuinely conducting their own business
• subject to control about how their work is performed, as an employee would be.

If workers were misclassified, LHA took a variety of actions, including imposing conditions or refusing to grant a labour hire licence.

Where businesses engage genuine independent contractors, LHA considers whether they will comply with applicable legal obligations such as superannuation, PAYG withholding tax, workers’ compensation and payroll tax.

LHA has published guidance for labour hire providers around engaging workers as independent contractors to help ensure providers:

• comply with legal obligations
• correctly classify workers
• avoid the risk of licensing action.

Illegal phoenix activity

Illegal phoenix activity occurs where a company is liquidated, wound up or abandoned in a deliberate attempt to avoid paying its debts. A new company is then started to continue the same business activities without the debts.

Phoenixing causes significant harm to workers who may miss out on wages, superannuation, and entitlements, as well as to other businesses that are put at a competitive disadvantage and to the community through unpaid taxes.

Illegal phoenix activity is estimated to cost the national economy in excess of $5 billion per year.

LHA pays careful attention to applications with a phoenix risk and scrutinises whether all relevant persons have been disclosed and whether the director complies with relevant laws. If LHA is not satisfied with the information provided it may refuse the licence application.

LHA works closely with the Australian Taxation Office and other government agencies under the national, 46-agency Phoenix Taskforce to stamp out illegal phoenix activity across the labour hire sector.

Read the full report

You can read the Labour Hire Authority Annual Report 2023-24 in full on the LHA website.

For more information on progress made in 2023-24, read LHA data snapshot – 2023-24 in numbers.