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In Queensland, the Labour Hire Licensing Act 2017 says a person must not provide labour hire services unless they hold a licence, with a maximum penalty for an individual of 1,034 penalty units or three years imprisonment, and for a corporation 3,000 penalty units. A person must also not advertise or hold out that they provide labour hire services without a licence. The chief executive must keep a register of licences and make it available free of charge on the labour hire website.

In Victoria, the Labour Hire Authority administers the Labour Hire Licensing Act 2018 and states that providers must be licensed and hosts must only use licensed providers. It publishes a Labour Hire Licence Register and a notification service so hosts can be told if a provider's licence status changes. The Authority has flagged that from 1 October 2026 the definition of providing labour hire services under the Victorian Act will be amended, and that businesses should review whether they or the entities they source labour from are now required to hold a licence.

South Australia and the Australian Capital Territory also operate labour hire licensing schemes under their own legislation and regulators. Check the requirements in each jurisdiction where workers are supplied, because the definitions, exclusions and reporting duties differ.

The Queensland Act provides that a person must not, without reasonable excuse, enter into an arrangement with a provider for the provision of labour hire services unless the provider holds a licence, with the same maximum penalties as providing unlicensed services. It also provides that it is a reasonable excuse if, when the person entered the arrangement, the provider was shown on the register as the holder of a licence. That makes a dated register check the host's defence.

Queensland separately prohibits entering an avoidance arrangement for the supply of a worker where the person knows or ought reasonably to know it is designed to circumvent or avoid an obligation under the Act.

In Victoria, the Labour Hire Authority states that host businesses engaging an unlicensed labour hire provider can face penalties exceeding 660,000 Australian dollars for a corporation and 160,000 Australian dollars for an individual, and that hosts also face disruption if the Authority finds an unlicensed provider has supplied workers to their business. It adds that hosts can be liable for a provider's contraventions under workplace and migration law, and share responsibility for workplace safety.

The Fair Work Act allows the Fair Work Commission to make a regulated labour hire arrangement order where an employer supplies employees, directly or indirectly, to perform work for a regulated host, a covered employment instrument applying to the host would apply to those employees if the host employed them for that work, and the host is not a small business employer.

The Commission must not make an order if satisfied that the work is for the provision of a service rather than the supply of labour, having regard to specified matters, and must not make one if satisfied it would not be fair and reasonable in all the circumstances. It does not matter whether the supply results from one agreement or several, nor who the agreements are between.

For a host, this means the cost assumption behind long-term labour hire may not hold. If the supplied workers are doing the same work as employees covered by your enterprise agreement or award, an order can require they be paid at least what that instrument would give them. Factor it into the commercial terms and the contract's price review mechanism.

The Victorian Authority describes licence fraud, where a person misrepresents themselves as a licensed provider, and lists indicators: paper documentation that cannot be verified, provider information that does not match the register, and bank account names that do not match a licensed provider or that change frequently.

It also warns about illegal phoenix activity, where a company is liquidated, wound up or abandoned to avoid paying its debts and a new company is started to continue the same activities without them. It notes the consequences: legitimate businesses put at a competitive disadvantage, employees missing out on wages, superannuation and entitlements, and lost community revenue.

The Authority further notes that if you are an intermediary who obtains workers from a labour hire provider and then provides those workers to another business, you may be a host under the Act, and if your arrangement with that business is wholly or principally for the provision of labour you may also be a provider and need a licence yourself.

Labour hire suits genuinely variable demand: seasonal peaks, leave cover, a project with a known end. The premium over direct employment buys flexibility and transfers the employment administration, not the whole risk, since the host still owes work health and safety duties to workers at its site.

Direct hire is cheaper for continuing work and produces better retention. A host using labour hire for the same roles continuously for years is usually paying a premium for flexibility it is not using, and may attract a regulated labour hire arrangement order.

A service contract, where you buy an outcome rather than labour, is a genuinely different arrangement, but it has to be real. The Fair Work Commission must consider whether the work is for the provision of a service rather than the supply of labour, and the Queensland Act prohibits arrangements designed to circumvent obligations. Relabelling supply as a service does not change what it is.