Election 2016: Labor pledges to crack down on “dodgy” labour hire companies amid concerns a licensing scheme will add to red tape

An election commitment by the Labor Party to introduce a national licensing scheme for labour hire companies will increase the red tape burden on Australian businesses, according to the Australian Chamber of Commerce and Industry.

Unveiling its latest policy to attempt to better protect workers’ rights, the Labor Party said in Thursday it will make it compulsory for labour hire companies to obtain an operating license if the party is elected on July 2.

The licensing regime, which would come into effect on July 1, 2017, would impose penalties for labour hire companies that operate without a license, as well as for other companies that “knowingly or recklessly” use an unlicensed labour hire company, according to a statement from the ALP.

Individuals found to have breached the licensing laws could be fined $216,000, while the penalty for body corporates would be set at $1.1 million.

“Recent examples of wrongdoing by dodgy labour hire companies that engage in unscrupulous practices and rip off workers is tarnishing employers that do the right thing, and is undercutting wages and conditions,” said Labor.

The federal opposition said the licensing regime would be overseen by a new division within the Fair Work Ombudsman’s office, called the Labour Hire Licensing and Compliance Inspectorate, which would monitor compliance and keep a public register of licensed operators.

The practices of labour hire operators were bought into the spotlight during 2015, when an investigation by ABC’s Four Corners program exposed “slave-like conditions”, gross underpayments and even sexual harassment and assault at a number of large labour hire companies.

In December 2015, a Melbourne labour hire company was fined more than $42,000 by the Federal Circuit Court for underpaying workers and breaching sham contracting laws.

Red tape concerns

However, the Australian Chamber of Commerce and Industry has flagged concerns with Labor’s proposal, which is says will “create a new layer of red tape” when existing laws are adequate to deal with businesses that do the wrong thing.

“Most labour hire arrangements are beneficial for all parties,” said Australian Chamber chief executive James Pearson in a statement.

“In those cases where workers are exploited, the existing laws are adequate to penalise offenders.

“Fair Work Inspectors already have the power to seek penalties for breaches and the Fair Work Ombudsman’s enforcement processes have successfully punished those who exploit workers.”

Pearson said labour hire operators are already subject to a range of legal requirements, including the Fair Work Act and state-based health and safety and workers’ compensation laws, along with anti-discrimination, taxation and migration laws.

“The proposed licensing regime would add to the regulatory burden experienced by workers, labour hire companies and businesses that use their services,” Pearson said.

“Binding businesses in more red tape to combat the actions of a few outliers risks denying opportunities for businesses that use flexible forms of labour legitimately and reduce job opportunities.”