Security company refused licence after poor responses to LHA requests for information

4 April 2024
Security company refused licence after poor responses to LHA requests for information

The Labour Hire Authority (LHA) has refused to grant a licence to a Victorian security company following an in-depth investigation into its application.

In assessing the company’s labour hire licence application, LHA identified multiple risks of non-compliance with legal obligations, including risks of:

  • contract prices with hosts being insufficient for the company to meet its legal obligations (as outlined in LHA’s Guidance for the security industry: cost of meeting your legal obligations)
  • suspected prohibited conduct by subcontracting to an unlicensed provider
  • employee misclassification and/or harm to workers engaged as independent contractors
  • the portable LSL levy not being paid on behalf of employees, due to the company not being registered with the Portable Long Service Authority (PLSA)
  • underpayment of employees
  • non-compliance with record-keeping obligations and workers’ compensation laws.

The company engaging its workforce as independent contractors on ABN, rather than as employees, gave rise to many of these concerns.

For example, the company did not count remuneration paid to its independent contractors for WorkCover insurance premium calculation purposes.

Many legal obligations that apply to employees often also apply to labour hire workers engaged as independent contractors.

LHA has published Guidance for labour hire providers: engaging workers as independent contractors, which explains some of the main legal obligations that commonly apply to independent contractors.

Requests for information are a crucial part of the licence application process

LHA sent a number of requests for information (RFIs) to the company’s nominated officer, seeking information to verify its compliance, including:

  • various tax and financial documents
  • contractual documentation
  • employee/independent contractor information and records
  • evidence of the company’s compliance with Victoria’s portable LSL and workers’ compensation schemes.

Some information provided by the company was unsatisfactory, other information was only provided after delays and deadline extensions, and some information was not provided at all.

The company’s labour hire licence application was refused, due to both:

  • risks of non-compliance identified, based both on information in the application and information obtained by LHA through subsequent enquiries
  • the company’s failure to provide satisfactory responses to RFIs.

Review of licence refusal decision

In response to LHA’s refusal of their labour hire licence application, the company exercised its right under the Labour Hire Licensing Act 2018 (Vic) to have the Victorian Civil and Administrative Tribunal (VCAT) review the decision.

However, prior to a VCAT hearing taking place, the company decided to withdraw their application for review, meaning LHA’s original decision to refuse the application stands.

Without a labour hire licence, it is unlawful for the company to advertise or provide labour hire services in Victoria.

Operating without a licence carries maximum penalties exceeding $600,000 for a company and $150,000 for an individual under the Act.

The importance of responding to requests for information

A business must provide a range of materials, evidence and declarations as part of their licence application, to assure LHA that foundations are in place to protect workers and build industry integrity.

When assessing an application, LHA may request more information from a business to properly understand any risks of non-compliance, and how a business might be addressing or mitigating them.

Where this occurs, it is important for the company’s nominated officer to provide all requested information in a timely manner. A failure to provide a satisfactory response to requests for information from LHA is grounds for refusal of the application.

Tackling non-compliance within the security industry

The security industry remains a key area of focus for LHA, to protect workers and continue to improve the transparency and integrity of the industry.

LHA continues to work with:

  • hosts and head contractors to ensure they maintain responsibility and transparency throughout their supply chains, through education and/or licence conditions
  • providers, by offering guidance about complying with their legal obligations and imposing conditions where appropriate to monitor compliance.

LHA takes firmer compliance actions where providers are unwilling or unable to comply with their legal obligations.

LHA will be hosting a Security Industry Forum later in 2024. More information and registration details will be provided in a future edition of LHA News.

Read more about LHA’s focus on the security industry:

More information

The LHA website has information and resources to help providers remain compliant with their legal obligations.