If Your Labour Hire Provider Isn't Licensed, Guess Who Else Pays the Fine?
Most business owners assume licensing is the provider's problem. In South Australia and several other states, it's theirs too. Here's how to check in two minutes, and what the industry looks like from the provider's side of the desk.
Do this before you read on
If your business uses labour hire workers, open a new tab and search for your state government's labour hire licence register. Type in the name of the business that supplies your workers.
Now check three things. Is the provider listed? Does the business name match the one on the invoices you pay? And who is named as running it?
If everything lines up, good. Keep reading anyway, because a licence that's valid today won't necessarily be valid next year. If something didn't match, or you couldn't find them at all, this article is for you.
Why this is your problem, not just theirs
Here's what most business owners believe: "I'm only paying for workers. Compliance is on them."
It's an understandable assumption. In the states that license labour hire, it's also wrong. There, the law doesn't just penalise a provider for operating without a licence. It also penalises the business that uses one. If you engage an unlicensed labour hire company, you can be on the hook too, and the penalties are large enough to seriously damage a small business.
This matters more than ever in South Australia. The state recently widened its labour hire rules to cover every industry, not just a handful. That means plenty of Adelaide businesses that have used labour hire for years without a second thought are now covered for the first time.
Pull up a chair: what a licensed provider is checked on
To understand why licensing protects you, it helps to see it from the other side of the desk.
A labour hire company can't simply fill in a form and start sending out workers. Before granting a licence, and while it's in place, regulators look closely at a few things.
Who runs the business. The people in charge need to pass a "fit and proper person" test. Regulators want to know about their history, their past businesses and whether they can be trusted to do the right thing.
Whether the business is financially sound. A provider that can't pay its own bills is a provider that may not pay its workers.
Whether workers are paid properly. That means correct wages, superannuation and entitlements, in line with the relevant award or agreement.
Whether the provider keeps the regulator in the loop. Changes to who runs the business, or how it operates, need to be reported.
Now read that list again from your own point of view. Every one of those checks protects you as well as the worker. A licensed provider has already been looked at by someone whose job is to spot problems before they reach your site.
The uncomfortable bit: cheap can be a warning sign
Every business wants a good price. But labour has a legal floor.
Wages, super, insurance and workers' compensation all have to be paid, and together they set a minimum cost for every hour a worker spends on your site. When a quote comes in well below what similar providers charge, it's worth asking how. Often, the honest answer is that someone is being short-changed. Workers are underpaid, super isn't being paid, or insurance doesn't exist.
When that unravels, it rarely stays with the provider. It can mean disruption on your site, damage to your reputation and, in licensing states, penalties for you.
There are two other risks most owners have never heard of. The first is licence fraud, where someone claims to represent a licensed provider when they don't. The second is "phoenixing", where a business deliberately closes to avoid paying its debts, then reopens under a new name and keeps trading. Both are good reasons to check the register yourself rather than take someone's word for it.
What a good provider does without being asked
So what does doing it properly look like? From the provider's side, here's the standard a reputable operator should hold itself to.
- Shows its licence details upfront. A good provider is happy for you to check them and won't be offended when you do.
- Explains pay rates clearly. It should be able to tell you how workers' pay is worked out and which award or agreement applies.
- Holds the right insurances and is open about subcontracting. Your work shouldn't be passed on to another business without your knowledge.
- Works with you on safety. Safety duties are shared between the provider and the host. A good provider will want to talk about site inductions, protective equipment and the hazards of your workplace before anyone starts.
If you're based in South Australia, add one more test. A reputable labour hire company in Adelaide should be able to explain the state's updated rules in plain English, and tell you exactly what they mean for your business, without you having to ask twice.
Questions to ask before you sign
Before you engage a new provider, or renew an existing arrangement, ask these questions:
- Can I see your licence details and check them myself?
- Who will actually employ these workers, and will any of the work be subcontracted?
- How do you make sure workers are paid correctly?
- Will you tell me straight away if anything changes with your licence?
Pay attention to how the provider answers, not just what it says. Clear, confident answers are a good sign. If a provider becomes vague or defensive, treat that as your answer.
Licensing is protection, not paperwork
It's easy to see licensing as more red tape. Look at it another way, and it's one of the simplest protections a business owner has. It does a large part of your due diligence for you, and it costs nothing to check.
Licences can be suspended or cancelled, so make checking a habit rather than a one-off. Look your providers up when you first engage them, and again every so often after that.
The right provider won't mind. In fact, it will welcome every one of these questions, because it has nothing to hide.
This article is general information only and isn't legal advice. Labour hire rules differ between states, so check the requirements where your business operates.
