Labour hire operators in Queensland and Victoria will need a licence to operate as the government in that state attempts to crack down on unscrupulous operators who cheat workers out of wages and undercut legitimate industry players, although doubt remains about whether Victoria’s scheme will cover construction workers or not.

In recent announcements, both state have signalled their intention to establish mandatory labour hire schemes for all labour hire operators within their respective states.

In Queensland, state premier Anastacia Palaszczuk said legislation to establish a mandatory licensing scheme for all labour hire operators operating across all industries would be introduced in May.

The scheme will require all labour hire operators to:

• Pass a fit-and-proper person test
• Comply with strict workplace laws, including workers’ compensation, wages and superannuation
• pay a license fee
• report regularly on their operations; and
• divulge the number of employees they have engaged, along with the number of employees engaged through work visa arrangements.

In Victoria, meanwhile, the government has given in principle support to recommendation from the state’s inquiry into labour hire practices that a licensing scheme for labour hire agencies.

Nevertheless, there is uncertainty as to whether Victoria’s scheme will in fact cover the building sector.

The recommendation of the inquiry was that the scheme initially cover three specific sectors in terms of horticulture, meat and cleaning (i.e. not construction).

Nevertheless, the government says it will engage in further consultation to determine whether or not the scheme should be limited to certain sectors or should be applied more generally.

The latest developments come amid ongoing concern that workers in construction and other sectors are being cheated by unscrupulous labour hire operators and that the labour hire system is being used as a mechanism by which to avoid employer obligations to workers.

In its submission to an inquiry into labour hire practices in Queensland, the Construction, Forestry, Mining and Energy Union documented a number of cases in which it said workers had been cheated as a result of labour hire arrangements.

In one example, carpenter ‘Shane’ was employed on a ‘contract’ arrangement by a labour hire firm operating out of an office at Salisbury but would perform work at a factory in Beenleigh.

When his host employer went into liquidation in 2015, the labour hire firm asserted that any outstanding wages were the responsibility of his host employer.

He was underpaid thousands of dollars and the labour hire firm accepted no responsibility for the unpaid wages.

In her announcement, Palaszczuk said the moves would help to end worker exploitation within the sector and reflected frustration at the failure of the Federal Government to implement such a scheme on a national basis.

Referring to a case where fruit and vegetable workers were found to have been underpaid by $77,649 in one week alone by a Queensland labour hire company, she said cases like this demonstrated the need for greater worker protection.

“Some of these workers were at times forced to work entire days harvesting produce without food or drink, without pay, as well as being forced to live in isolated transient accommodation,” Palaszczuk said.

“The only way to put an end to this kind of appalling exploitation is through the introduction of a proper labour hire regulation scheme.”

“You need a licence to operate a real estate agency or to be a motor car dealer, so why shouldn’t you need a licence to run a labour hire firm?”

Queensland Industrial Relations Minister Grace Grace said the new scheme would prevent legitimate labour hire companies being undercut by rouge operators.

“We consulted widely with key industry stakeholders on the challenges facing the industry and the vast majority support mandatory licensing,” Grace said.

“They’re sick and tired of seeing workers outrageously exploited, and fed up with being undercut by shonky operators who flout the rules with impunity.”