New licence conditions for providers in high-risk industries

Since June 2026, new standard conditions apply to licences granted in industries with heightened risks of worker exploitation and unlawful conduct.

The standard conditions will also be rolled out progressively to existing licence holders in high-risk industries from late 2026, including businesses in:

• horticulture
• commercial cleaning
• security
• meat and poultry processing.

These industries have been identified as having a sustained higher risk profile, with a significant proportion of Labour Hire Authority (LHA) licensing actions being issued to businesses operating in them.

Since 2019, 63 per cent of all licence cancellations, and 79 per cent of licence application refusals have been issued to businesses in these industries.

The standard conditions include provisions to limit the risk of worker exploitation, such as worker misclassification, complex supply chains and underpayments.

These standard conditions cover:

• restrictions on cash payments
• restrictions on the use of independent contractors
• restrictions on the use of subcontractors to one tier only
• reporting the use of payroll service providers
• provision of an LHA Information Sheet to all workers
• reporting a change of industry
• workplace health and safety
• worker accommodation.

Each of these conditions is explained in more detail below.

Licence conditions and labour hire licensing

Labour hire licensing acts to protect workers and support industry transparency and integrity, through a range of checks on labour hire businesses and the people operating them.

In circumstances where heightened risks of worker exploitation and unlawful conduct are identified, LHA can apply licence conditions to further address these risks.

To maintain their licence, labour hire providers must comply with any licence conditions, as well as with their other legal and licensing obligations, including to:

• comply with relevant laws and standards 
• ensure all relevant persons are ‘fit and proper’ 
• notify LHA within 30 days of changes to the business or its relevant persons 
• provide annual reporting and respond to LHA communication. 

Failure to comply with licence conditions can lead to licensing action – up to and including cancellation – and legal action where required to address unlawful conduct.  

Maximum penalties of more than $160,000 apply for non-compliance with licence conditions.

Information on each of the new standard conditions is provided below. 

For more information and guidance, visit licence conditions.

Restrictions on cash payments

The standard conditions restrict cash payments to workers and subcontractors.

To comply with the licence conditions, providers must make all payments to workers or subcontractors related to labour hire services:

• by electronic transfer 
• through an authorised deposit-taking institution 
• into an account in the name of the worker or subcontractor. 

Cash payments may be made in limited circumstances – in an emergency, or where they are authorised by LHA.

The conditions allow for flexibility where there is a genuine need for cash payments.

Cash payments to workers and subcontractors reduce transparency and increase the risk of harm to workers, legitimate businesses and the wider community. This is because cash payments are correlated with higher incidences of underpayment of wages, non-payment of superannuation, avoidance of tax obligations and failure to pay WorkCover insurance.

Restriction on the use of independent contractors

Conditions imposed on providers operating in the horticulture, meat and poultry processing, and commercial cleaning industries prohibit providers supplying workers engaged as independent contractors to perform specific work activities related to their industry.

This applies to workers who are directly engaged by a provider, or through another provider via a subcontracting arrangement.

Providers who have a compelling reason to engage a worker as an independent contractor can apply to LHA to vary their licence.

Standard conditions imposed on providers in the security industry prohibit providers supplying workers engaged as independent contractors unless the independent contractor holds a private security business licence, in addition to a private security individual operator licence. This condition is consistent with changes to the Private Security Act 2004 (Vic) that came into effect in June 2025.

Misclassification of employees as independent contractors is a strategic focus for LHA because of the significant harm:

• to workers, through undercutting minimum wages set in the modern award or enterprise agreement and the perceived ability to avoid other legal obligations such as superannuation and portable long service leave
• to the community, through the avoidance of taxation obligations such as PAYG withholding and payroll tax, and failing to pay adequate premiums for workers’ compensation
• to compliant businesses, which are unfairly disadvantaged when competing against non-compliant providers that have unlawfully lowered their costs.

Restrictions on the use of subcontractors to one tier only

Under the standard conditions, providers may only supply its workers directly to a host, or to another licensed labour hire provider for on-supply directly to a host.

When using subcontractors, providers must not use more than a single tier of subcontracting, and must report the use of subcontractors to LHA as part of their annual report, providing:

• the name and labour hire licence number of the subcontractor
• the name of the host for which the subcontractor is providing workers
• the business address of the host, for which labour hire services are being provided by the worker.

Subcontracting increases the risks of non-compliance with legal obligations under workplace, taxation, superannuation and occupational health and safety laws by shifting the risk down the supply chain.

While subcontracting can be a legitimate business model, it can also be used by unscrupulous operators to illegitimately minimise cost and obscure operators lower in the chain from regulators.

Every additional tier of subcontracting impacts transparency, and the potential for providers’ profit margins reduces leading to a greater risk of worker exploitation.

The condition addresses the risks created by complex supply chains by limiting subcontracting tiers and requiring supply chain transparency.

Reporting the use of payroll service providers

Within seven days of engaging a payroll service provider, labour hire businesses must provide to LHA the name, contact details and proof of registration with the Tax Practitioners Board, or an explanation as to why registration is not required.

Outsourcing payroll services can lead to loss of control over payroll, compliance issues, data breaches and make it difficult for businesses to manage payroll processing effectively. It can also lead to increased risks of contravening taxation laws.

Provision of an LHA Information Sheet to all workers

Before a worker commences work with a provider, the licence holder must give every worker a copy of the Labour Hire Information Sheet. A printed or electronic copy can be given.

The information sheet informs labour hire workers of their rights under the law, and how to report problems to LHA.

Reporting a change of industry

Providers must notify LHA in writing within ten business days if they commence supplying workers in an industry that has not already been disclosed in their licence application or annual report.

Workplace health and safety

Providers must supply all personal protective equipment (PPE), without charge, to workers to minimise exposure to any workplace hazards.

Providers must reimburse workers for any PPE purchased by workers specifically for work for the provider. 
Licence holders must cooperate with hosts to ensure workers are provided with information, training, and instruction on the proper use, wearing, storage and maintenance of PPE.

In appropriate cases, PPE can be reused and reissued to other workers. However, the licence holder must ensure that all used PPE has been decontaminated, is clean and in good condition if it is to be reused.

Labour hire providers and hosts continue to have shared responsibilities for worker health and safety, including:

• providing and maintaining a safe working environment
• training
• assessing risks
• monitoring the health of employees
• monitoring conditions at the workplace.

They must also ensure the employee is capable and provided with everything they need to do the job safely.

Worker accommodation

To comply with the licence conditions on worker accommodation, labour hire providers must:

• ensure housing procured for or provided to workers meets the applicable minimum standards – even if it is provided by a third party, such as a real estate agent
• take reasonable steps to ensure it remains compliant throughout the time workers live there.

Providers should establish and document processes for:

• regular monitoring of the condition of the accommodation
• maintenance and repairs
• collecting regular feedback from workers on their comfort and wellbeing
• monitoring ongoing compliance with minimum standards.

Substandard housing causes significant risk and harm to labour hire workers, through issues such as:

• overcrowding
• poor maintenance or substandard cleanliness
• insufficient safety measures
• inadequate facilities or non-functional waste management.

For more information, see last month’s article on accommodation conditions.