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 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.
See our page on:
- excluded classes of workers for more information about secondment arrangements.
- transport for scenarios in a transport industry setting.
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 EFG 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.
Marino Farms operates several large properties and is in the business of sheep farming and selling wool. Throughout the year, workers for Marino Farms maintain the farm and most of its equipment and looks after the sheep.
Occasionally the local Vet, Mary who works for herself, will visit Marino Farms and provides specialised Veterinary services to the farm.
Each year We Supply Shearers Ltd supplies some workers to Marino Farms to shear sheep owned by Marino Farms. Marino Farms pays We Supply Shearers Ltd who in turn pay the workers employed by them who carry out work for the farm.
The workers employed by Marino Farms round the sheep up and deliver them to an area adjacent to the sheering shed. The workers supplied by We Supply Shearers Ltd shear the sheep or are wool classers, roustabouts and cooks. Sometimes workers supplied by We Supply Shearers Ltd sweep the floor and carry out other basic cleaning tasks. Sometimes workers for Marino Farms help in the shearing shed. The wool is baled and Marino Farms sells the bales to their customers.
Some of the workers supplied by We Supply Shearers Ltd are employed on a casual basis and paid hourly rates in accordance with the Pastoral Award. The Shearers work under the Pastoral Award with a piece rate agreement which provides for a higher rate of pay than the hourly rate which is allowed under that specific Award.
Although Mary performs work within the business of Marino Farms, Mary does not ‘provide labour hire services’ and is not a ‘worker’ because:
- She is the sole director of her own company and is engaged directly by the farm; and
- She is not supplied to the farm by a provider.
We Supply Shearers Ltd ‘provides labour hire services’ and is therefore required to hold a labour hire license because:
- The workers supplied by We Supply Shearers Ltd are considered to work ‘in and as part of the business or undertaking’ of Marino Farms because: workers are performing work at the host’s premises; preparing wool for sale is an integral part of the business of Marino Farms; workers are directed and supervised by the host.
- Notwithstanding anything else, We Supply Shearers Ltd ‘provides labour hire services’ because they supply at least one person to Marino Farms who at times performs activities as a cleaner in a commercial premises and is therefore taken to perform work ‘in and as part of a business or undertaking’ by reason of regulation 5 of the Labour Hire Licensing Regulations 2018.
- The definition of a ’worker’ under section 9 of the Labour Hire Licensing Act 2018 is agnostic to whether workers are full time, part time, casual, subcontracted or under a piece rate agreement.
We are a security business. Do we need a licence under the Labour Hire Licensing Act 2018?
Shop with Us Ltd (Shop with Us) owns and operates several large shopping centres. As part of its business undertaking it is required to meet basic security and safety expectations of tenant retailers and their customers, and to fulfil insurance obligations. Shop with Us arranges for external security to fulfil these requirements and obligations. Shop with Us is of the view that its arrangement is a services contract.
Safety First Pty Ltd (Safety First) provides security guards to Shop with Us. Safety First security guards patrol the Shop with Us shopping centre during retail opening hours and are subject to overall direction of the shopping centre management.
Gardit Pty Ltd (Gardit) provides a ‘gate checking’ service to the Shop with Us shopping centre. Gardit’s staff perform occasional cursory, after hour checks, to:
- verify that the facility is secured internally and externally
- provide an alarm monitoring service
- report damage or refer matters to police where appropriate.
The two security businesses (Safety First and Gardit) are licensed under the Private Security Act 2004 (Vic), administered by the Victoria Police. One of the requirements of their licences is that Safety First, Gardit and their respective staff meet certain character tests and related other requirements.
Question: Is a private security licence enough for an individual or business to comply with the Labour Hire Licensing Act 2018?
Answer: No. It is a mandatory requirement for a business providing labour hire services to hold a licence under the Labour Hire Licensing Act 2018. A business may be required to hold multiple licences or accreditations, for example in this scenario, Safety First and Guardit are required to have valid labour hire licences and security licences.
Question: Is Safety First a labour hire provider?
Answer: Yes. Under the Labour Hire Licensing Act 2018 and the Labour Hire Licensing Regulations 2018, Safety First is supplying workers to perform work in and as part of the business or undertaking of the Shop with Us shopping centre. It is irrelevant how Shop with Us describes the arrangement.
Question: Is Gardit a labour hire provider?
Answer: No. Gardit is not supplying workers to work in and as part of the business or undertaking of the Shop with Us shopping centre. It is supplying a service.
Market Festival Pty Ltd (Market Festival) holds weekly night markets in Melbourne. Market Festival employs 20 security guards to perform crowd control at the night markets. Under its contract with the local council, Market Festival must have 20 security guards working each night that the night market operates.
A security guard employed by Market Festival phones in sick on the day of the night market. To cover the sick security guard and fulfil its obligations under its contract with the local council, Market Festival enters into an arrangement with Protect Pty Ltd (Protect). Protect is a business that provides security guards to other businesses who run public events.
Sam is an employee of Protect. Under the arrangement between Market Festival and Protect, Sam works as a security guard at the night market to cover the sick Market Festival security guard. Sam patrols alongside the remaining 19 security guards employed by Market Festival.
Question: Is the arrangement between Protect and Market Festival a labour hire arrangement?
Answer: Yes, the arrangement between Protect and Market Festival is a labour hire arrangement.
- Market Festival is a host – Protect supplies Sam to perform work in and as part of Market Festival’s business
- Protect is a labour hire provider – it supplies Sam to Market Festival to perform work in and as part of Market Festival’s business and must pay Sam
- Sam is a worker – he has an arrangement with Protect under which Protect supplies him to Market Festival to perform work.
Protect must hold a labour hire licence under the Labour Hire Licensing Act 2018. Protect is a labour hire provider whether or not they supply Sam on a temporary or ongoing basis.
SafeParty Pty Ltd (SafeParty) is a company that provides security guards for birthday parties held at residential homes. It does not provide any other services.
SafeParty enters into a contract with John and Joan Smith (the Smiths) to provide a security service for their daughter Mary’s 18th birthday. The Smiths pay an agreed fee to SafeParty.
SafeParty sends one of its employees, Matt, to be the security guard for Mary’s party. The contract between SafeParty and the Smiths states that Matt’s job will be to attend the Smiths’ home for 4 hours on the day of Mary’s birthday party. Matt’s main task is to ensure that only invited guests gain entry to the party.
Question: Does SafeParty require a licence?
Answer: No. In this scenario, SafeParty is not a labour hire provider. Although Matt is a ‘worker’ and is paid by SafeParty, he has only been provided to the Smiths to provide a service at their home. He has not been provided by SafeParty to work ‘in and as part of’ a business or undertaking run by the Smiths.
We are a home care business. Do we need a licence under the Labour Hire Licensing Act 2018?
Janet is 86 and lives in her own home. Janet needs some personal and domestic help in her home and is eligible for relevant government subsidies. Janet asks Home Assist Pty Ltd (Home Assist) to supply a Personal Care Assistant (PCA) to come to her home for one hour each day. Home Assist employs Marg to go to Janet’s, and other clients’ homes, and perform various personal care and domestic tasks.
In this scenario:
- although Home Assist supply carers to perform work in the homes of its clients, it is not a labour hire provider because it is not supplying carers to work in and as part of the business or undertaking of another person
- Marg is not a worker as, although she is performing work for Janet, the work is not in and as part of a business or undertaking of Janet
- although the work is being performed at Janet’s residence, she is not conducting a business and is not a host.
Maria is 57 and lives in her own home. Maria is recovering from surgery and needs help with shopping and some cooking once a week. A friend tells Maria about Home Cooks Pty Ltd, a business that provides shopping and home cooking services. Maria asks Home Cooks for a Spanish speaking home cook to attend one day a week to do her shopping and cook food for her freezer. Home Cooks don’t have any Spanish speaking home cooks on staff, but they try to find someone to help their new customer Maria. Home Cooks locates Nicholas, a cook who speaks Spanish, through a labour hire company, Cooks & Chefs Pty Ltd. Home Cooks arranges with Cooks & Chefs for Nicholas to attend Maria’s home once a week to help her with shopping and cooking. Cooks & Chefs pay Nicholas for the work he performs for Maria and invoice Home Cooks for supplying Nicholas.
In this scenario:
- Cooks & Chefs is a labour hire provider as it is conducting a business of providing cooking staff, and supplies Nicholas to Home Cooks to work in and as part of Home Cooks’ business
- Home Cooks is a host because Cooks & Chefs is providing them with labour hire services
- Nicholas is a worker as he has an arrangement with Cooks & Chefs under which Cooks & Chefs supplies him to other persons to perform work, and Cooks & Chefs are obliged to pay him for performance of that work
- although the work is being performed at Maria’s home, she is not conducting a business and is not a host.