The Labour Hire Authority (LHA) has commenced legal action in the Supreme Court of Victoria against a Keysborough-based labour hire provider operating in the horticulture industry.
Monorom Labours Power Pty Ltd, which LHA alleges provided workers to regions including the Yarra Valley and Koo Wee Rup, allegedly failed to notify LHA:
- of multiple changes in company directors and secretaries – a breach carrying maximum penalties exceeding $30,000 for a company and $7,500 for an individual
- that one director and secretary was not a fit and proper person – a breach carrying maximum penalties exceeding $600,000 for a company and $150,000 for an individual.
LHA’s case seeks individual penalties against two directors – Saravong Tath and Visal Leab – as well as penalties against the company, for contraventions of the Labour Hire Licensing Act 2018 (Vic).
It is alleged that Saravong Tath had been a director of two companies that were placed into administration within the preceding five years, meaning Tath was not a fit and proper person to be a director and secretary of a labour hire provider under the Act.
The provider also allegedly made numerous changes in company directors and secretaries over a six-month period in 2022, without notifying LHA.
“Ensuring we have fit and proper people running Victorian labour hire companies helps to protect workers, and improve the industry’s integrity,” said Labour Hire Licensing Commissioner, Steve Dargavel.
“Labour hire workers in the horticulture industry are among Victoria’s most vulnerable, so the industry is a key focus for our expanded compliance and enforcement program.”
Beware of illegal phoenix activity
Although not alleged in LHA’s legal action against Monorom Labours Power, frequent changes in company directors can indicate illegal phoenix activity – where a business is wound up or abandoned to avoid debts or obligations, then continues under a new business identity.
LHA is a member of the national Phoenix Taskforce and works closely with the Australian Taxation Office and other commonwealth and state agencies, focusing on illegal phoenix activity and the significant harms to workers and legitimate businesses it can cause, including:
- unfair disadvantages for compliant providers and hosts
- loss of revenue for unpaid suppliers and sub-contractors
- loss of wages and entitlements for workers
- loss of tax revenue used to provide services to the community.
Hosts should be wary where a provider changes its name or ABN but its contact people remain the same, and should check the provider is not engaging in illegal phoenix activity or worker exploitation.
“We work closely with other regulators to identify and address illegal phoenix behaviour, and to ensure labour hire providers who attempt to avoid their obligations are held to account,” said Labour Hire Licensing Commissioner, Steve Dargavel.
Hosts can take steps to protect their businesses from illegal phoenix activity by looking out for the following signs:
- quotes lower than market value
- company directors previously involved with liquidated entities
- requests for payments to a new company
- changes to a company's directors and name, while the manager and staff remain the same.
Ensure you notify LHA of any changes in relevant persons
Under the Act, directors and other key people involved in managing labour hire businesses must be fit and proper, to protect workers and improve the integrity of the industry.
Relevant persons are assessed against a fit and proper person test as part of the licence application process. LHA must be notified if directors or other relevant persons change, or are no longer fit and proper under the Act.
If you have queries around this requirement, you can contact LHA by phone on 1300 545 200 or email email@example.com
Compliance and enforcement in horticulture
The horticulture industry continues to be a focus of LHA compliance and enforcement, with recent significant activities including:
- the successful prosecution in December 2022 of Ung Services Pty Ltd and its director, which failed to inform LHA of the director’s criminal convictions, resulting in the largest ever total penalty for breaches of labour hire law in Australian history
- two actions recently commenced in the Supreme Court of Victoria:
As well as these enforcement actions, LHA has recently undertaken a range of investigations of horticulture providers, resulting in refusals of licence applications and cancellations of licences.
The horticulture industry has also been a strong focus for LHA’s program of regional engagement across 2023, with our team visiting towns and regional centres and meeting directly with horticulture hosts and stakeholders. These sessions will continue later this year, with horticulture providers and hosts encouraged to attend to support their understanding of their obligations and LHA’s activities.