by | Aug 21, 2020 | Articles, Business

Does your business work with or alongside contractors or sub-contractors?

If you answered yes you need to keep reading!


Because the new Victorian Labour Hire Licencing Scheme has recently been introduced by the Victorian Government which will drastically affect both contractor’s and sub-contractors across all industries including the building and construction industry, the cleaning industry and the agricultural industry (just to name a few).

Following an inquiry into the standards of working conditions and exploitation of workers performing contract-based work the new licensing scheme is in force to crack-down on organisations who have taken advantage of this unregulated industry.

From 29 April 2019 businesses who provide contractor services to other business (“Provider”) must have a licence to continue operating legally. And if you are a business that obtains contractor services from another business (“Host”) you must only engage with Provider’s who are licenced.

What is the consequence?

If you are an unlicensed Provider, or you are Host that engages with unlicensed Provider’s then you could face significant fines between $120,000 to $500,000 (or more).

How do I know if I’m a Provider or a Host?

A Provider organisation in the conduct of their business provides contract services to third party organisations.

A Host organisation obtains contract services to assist in their business on a contractual basis to meet the needs of their business.  

For example:

Joe is a plumber who owns and operates the business “Joe the Plumber Pro”. Joe mostly works for himself but occasionally when he has too many jobs he sub-contracts the job to some of his mates in the plumbing industry.

Joe is contacted by David who owns the business “Melbourne Homes”. Melbourne Homes is a national builder that builds new homes across Victoria. David has 100 new home build projects that needs to be completed within a certain time frame, however he has a shortage of plumbers to finish all the work in time. He doesn’t want to upset the homeowners and wants to maintain his reputation as being the best.

To fix the issue David contacts Joe about getting some additional help for the next few months until the current projects are completed. Joe already has plenty of work, but see’s it as a great opportunity to build a working relationship with Melbourne Homes. Joe says yes to helping Melbourne Homes, but contacts his mate Henry to do the job until Joe has finished the jobs he’s currently working on.

In this case, Joe would be considered a Provider because he is providing contractor services to David’s business and Melbourne Homes is the Host organisation obtaining the contractor services.

Joe needs to make sure Labour Hire Solutions is licensed under the new scheme, and David needs to make sure Melbourne Homes is only obtaining labour hire services from licensed Providers.

What next?

Step 1: Get a licence

From 29 April 2019, Provider organisations have 6 months to obtain or to have applied for a labour hire license. If you fail to obtain a licence before 30 October 2019 you may be fined.

How do I get a license? How much does it cost?

You can obtain a licence through the Labour Hire Authority website:

A person applying for a licence will undergo a ‘fit and proper person’ test and will be assessed on the following:

  • Registration with Work Safe Victoria;
  • Registration with the ATO;
  • Minimum rates of pay and superannuation entitlements for workers;
  • Minimum accommodation standards;
  • Conditions of workplace and workers;
  • Visa status of workers.


The following fees apply to obtaining a licence:

  • $1,560.60 – application fee; and
  • $1,083.75 – annual licence fee that is paid when a licence is granted and at the start of each 12 month period after that.


Step 2: Get a contractor/sub-contractor agreement

This industry has never been regulated by a government body previously, therefore if you engage or work alongside contractors or sub-contractors you need to ensure that not only are you working with licensed providers but also that you are entering into contractor and sub-contractor agreements meet the requirements under these new laws.

Still not sure?

If you are uncertain about how the new labour hire license scheme affects you;

You aren’t sure how to apply for a licence; or

You need a contractors/sub-contractors agreement

Please contact our office on 9743 1333 or email and one of our business lawyers will guide you through the process.


Please note the above is intended to be commentary and general information. Commentary and general information should not be relied upon and substituted as legal advice. Formal legal advice should always be obtained.

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