General definition of labour hire services
The main category of labour hire providers is defined in section 7 of the Labour Hire Licensing Act 2018(Vic.) (the LHL Act), which provides that a labour hire provider is a business that has an arrangement in place with one or more individuals to supply the individuals to perform work in and as part of a host’s business or undertaking and is obliged to pay the individual for the work performed for the host.
This page explains what ‘performing work in and as part of a host’s business or undertaking’ means, and gives examples of when something is and is not a labour hire service. This guidance is provided to assist businesses to think through their circumstances and determine whether they will require a labour hire licence.
Businesses must consider all of their engagements where they supply workers, and consider whether they are providing labour hire services within the meaning of the LHL Act.
If your business provides labour hire services, you will require a licence. If, after reading through the guidance material, you remain unsure, you should seek legal advice.
Assessing whether an arrangement is a labour hire service
In many cases, it will be obvious whether a particular arrangement is for the supply of workers on a labour hire basis, such that the workers work in and as part of the host’s business or undertaking.
Where it is not clear if a particular arrangement is labour hire, and you are uncertain about whether a worker is performing work ‘in and as part of’ a host’s business, you will need to look at what activities the worker is performing, and the level of integration of those activities in the host’s business or undertaking.
To give you an idea, some factors that might suggest a worker is performing work in and as part of the host’s business include:
- the work is performed at the host’s premises
- the work is subject to the host’s direction
- the work is supervised or managed by the host or another labour-hire worker supervised or managed by the host
- the work is not a specialised service
- the work is a key function of the host’s business or undertaking
- the work is of a similar nature to work performed or previously performed by the host’s own employees.
The above list is not exhaustive and these and any other factors are not determinative on their own. Each arrangement needs to be looked at as a whole.
The examples provided on this page are for illustrative purposes only, and do not constitute legal advice. You should consider your particular circumstances when determining whether you require a labour hire licence. If you are unsure, you should seek legal advice.
A hospitality staffing agency, HSA Pty Ltd (the provider) supplies waitstaff to restaurant (the host) who requires some extra staff for a large function. The waitstaff are considered to be working ‘in and as part of’ the business of the host restaurant as they are performing the work of the host business, at the host’s premises, directed and supervised by the host and are not considered to be providing a specialised service. The work performed by the workers is a key function of the host’s business and is the same as the work performed by the host’s own employees. HSA Pty Ltd pays the waitstaff it provides, and invoices the restaurant for the hours worked by the waitstaff. No one factor is definitive, but looking at the engagement as a whole, this arrangement would be considered to the provision of labour hire services, and would require HSA Pty Ltd to have a labour hire licence.
ABC Pty Ltd (the provider) supplies construction workers to Builders Pty Ltd (the host) who requires some extra staff for a large project that Builders Pty Ltd is undertaking. Builders Pty Ltd supplies the materials, directs and supervises the work, the construction workers supplied by ABC Pty Ltd are doing work that Builders Pty Ltd is responsible to complete and is a key function of their business and the workers are working alongside Builders Pty Ltd’s direct employees doing similar work. No one factor is definitive, but looking at the engagement as a whole, the workers supplied by ABC Pty Ltd are considered to be working ‘in and as part of’ the business of Builders Pty Ltd, and as a result this arrangement would be considered to the provision of labour hire services, and would require ABC Pty Ltd to have a labour hire licence.
Drilling Pty Ltd is engaged by EFG Mining Pty Ltd to drill for samples on 5 different sites as part of a team assessing the sites for suitability for mineral mining. The work of the different contractors in the team is coordinated by EFG Mining Pty Ltd. Drilling Pty Ltd provides the drill rig and all staff required to operate the rig. While the work is performed on a site which is controlled and operated by EFG Mining Pty Ltd, the work done by the employees of Drilling Pty Ltd is not subject to direction or supervision by EFG Mining Pty Ltd, aside from matters of site safety and coordination with the other teams. The nature of the drilling work is highly specialised, using specialist equipment, and while drilling is a usual part of site exploration and assessment, it is not usually work that EFG Mining Pty Ltd does themselves, and is not a key part of their usual operations.
Looking at the engagement as a whole, Drilling Pty Ltd is not providing individuals to perform work in and as part of EFG Mining Pty Ltd’s business. Instead, when the workers are doing the drilling work, they are performing the work in their capacity as employees of Drilling Pty Ltd, doing work that is the key function of Drilling Pty Ltd’s business and is work that Drilling Pty Ltd has been engaged to do. Further Drilling Pty Ltd is responsible to direct and supervise the work, in order to produce the samples required under their agreement with ERG Mining Pty Ltd.
An accounting firm, Accountant Partners & Co, provides an accountant to work on a client’s premises, for the purpose of preparing the client’s tax documentation. This is not considered to be labour hire because, even though the accountant is performing the work on the client’s premises, the accountant is still performing the work in their capacity as an accountant, employed by Accountant Partners & Co, performing work that Accountant Partners & Co has been engaged to do. The accountant is not directed or supervised by the client, and the work the accountant performs is not a key function of the client’s business, and is different from the work performed by the client’s own employees. In this way, the accountant remains working in and as part of Accountant Partners & Co’s business, not the client's business.
However, if the circumstances were such that Accountant Partners & Co provided the accountant to the client to supplement the client’s team, and the accountant was performing the same work as the client’s employees, this would be labour hire and would require a licence unless the accountant fell within one of the excluded classes of workers, such as a secondee.
See our page on excluded classes of workers for more information about secondment arrangements.