Labour Hire Licensing: further changes ahead for wine businesses

The South Australian Government has introduced legislation to limit the application of the new Labour Hire Licensing Scheme to specific industries, remove the jail term and ease some of the reporting requirements.

These are sensible and welcome changes for the wine industry, which relies on temporary labour during peak operational periods, including for vintage and pruning.

However, even if this legislation is passed, the state government is of the view that the wine industry would continue to be covered by the labour hire licensing system.

When the South Australian Labour Hire Licensing Act was introduced in 2017 it was met with considerable opposition for its impractical and excessive requirements.

Under the Act, providers of ‘labour hire services’ must obtain a licence in order to provide their services.

Failure to do so may result in three years jail and/or $400,000 in penalties for the provider and their clients, including wineries and grapegrowers.

“Another issue relates to the application process for a licence. Providers must demonstrate that they either have senior managers with university qualifications or alternatively undertake specified training. For many smaller providers this is costly and impractical,” said Henrik Wallgren, business services manager at the South Australian Wine Industry Association (SAWIA).

“We’ve been made aware that there are small providers operating as family businesses and often by people from a non-English speaking background who are unable to satisfy these training requirements due to language barriers.

“Given the substantial penalties, it is essential that wineries and grapegrowers understand what services meet the definition of labour hire services, to ensure they won’t be hit with penalties.”

So, what is labour hire and how is it used within the wine industry?

In short, labour hire is an arrangement whereby a labour hire agency supplies a worker to a third party (host) in exchange for a fee (labour hire employment arrangement).

The worker is engaged by the labour hire agency, either as an employee or as an independent contractor and there is no direct employment or contractual relationship between the host and the labour hire worker.

Access to temporary labour during peak operational periods, including vintage and pruning, is crucial to the Australian wine industry, which has highly seasonal operational demands.

Labour hire and other contracting services are important sources of temporary labour, but other sources are also used.

This includes casual employees living locally, backpackers and working holiday makers, job-active providers and recruitment firms.

“Labour hire and contracting services are a legitimate service and provide an important source of temporary labour that is greatly needed during peak operational periods,” Wallgren said.

“When the South Australian Government announced its intention to consider a licensing scheme for the labour hire industry in May 2015, SAWIA identified this as a key issue for our advocacy.”

To support wine businesses in managing their legal obligations under employment, migration and work health and safety laws when engaging temporary labour through labour hire providers and other contracting providers, SAWIA rolled out a training program around this time across South Australia.

“SAWIA absolutely supports employees of labour hire providers receiving their correct legal entitlements and being treated in a lawful and ethical manner,” Wallgren said.

“However, we do not see a need for a labour hire licensing scheme, given that there are substantial compliance measures in place, including financial penalties available to the Fair Work Ombudsman and the Courts under the Federal Fair Work Act 2009.”

“There are far more effective ways of capturing the small number of labour hire businesses that are deliberately breaching workplace laws than by administering a licensing system.

“This includes greater cooperation between the relevant authorities by, for example, sharing of information and intelligence and greater presence and visits by for example the Fair Work Ombudsman and enforcement of existing laws.”

After the 2018 State election, SAWIA supported the South Australian State Government’s efforts to repeal the labour hire licensing scheme. However, with State Parliament ultimately failing to pass the repeal legislation, the State Government is now seeking to reform the licensing legislation.

To assist the wine industry and their service providers in complying with the requirements under the South Australian labour hire licensing scheme, SAWIA ran briefings across the SA wine regions in July and August 2019.

These briefings clearly highlighted the concerns with the current system – from unclear definitions, to impractical requirements which simply add red tape.

It should be noted that labour hire licensing laws are not only in place in South Australia, but also in Victoria and Queensland. The Australian Capital Territory is considering introducing its own licensing scheme.

In addition, the Federal Government is currently consulting with State and Territory Governments on the design of an industry-specific National Labour Hire Registration Scheme.

The scheme would cover the horticulture industry, which SAWIA understands would incorporate the wine industry. SAWIA would expect legislation to establish this scheme to be passed in 2020.

Labour hire licensing requirements will continue to a key issue for the wine industry and SAWIA strongly encourages wine businesses to carefully assess whether their providers are required to hold a licence.