Labour hire NSW vs Victoria: the regulatory comparison

Australia does not have a national labour hire licensing scheme. Each state sets its own rules, and the gap between Victoria and New South Wales is the widest in the country. Victorian providers must hold a Labour Hire Authority (LHA) licence to operate, hosts must use licensed providers, and breaching either obligation attracts six-figure penalties. NSW has no equivalent scheme. For employers operating in both states, that gap creates a compliance trap: an arrangement that is legal in Sydney can be unlawful 800 kilometres south in Melbourne. This guide compares the two systems, explains where contractor arrangements get caught by Victorian law, and shows how to run a licence check before you engage any provider.

Why this blog exists

Cross-border operators — national 3PLs, food manufacturers, cleaning contractors, construction project managers — get caught between the two systems often. The Victorian Labour Hire Licensing Act 2018 is one of the strictest schemes in the country. The NSW position is the absence of one. Neither is well understood by employers, and the price for getting it wrong sits in the hundreds of thousands of dollars per breach. This guide is for the employer running both Sydney and Melbourne operations, and for the recruiter or contractor wondering if Victorian rules apply to their arrangement.

We are Wise Recruitment and Consulting, a licensed Victorian labour hire provider (LHA licence VICLHL10427) operating across Melbourne and Sydney. The summary below reflects the current state of the law and the LHA’s published guidance.

What is labour hire and why is it regulated?

Definition of a labour hire provider. A labour hire provider supplies workers to a host business, retains the employment relationship with those workers, and is paid by the host for the supply of labour. The worker is employed by the agency. The host directs the day-to-day work.

Direct employment vs labour hire: the key difference. A direct casual employee is hired by the host. The host runs the payroll, accrues the obligations, and carries the entitlements. A labour hire worker is employed by the agency. The agency pays the wages, super, WorkCover, and payroll tax. The host pays the agency.

Industries most affected. Construction, warehousing, logistics, cleaning, horticulture, manufacturing, food processing, security, hospitality, and IT contracting all use labour hire at scale. Each has its own pattern of compliance risk.

Why governments regulate labour hire. The labour hire model has historically been associated with patterns of worker exploitation: underpayment, unsafe conditions, dodgy phoenix operators, and tax minimisation through cash-in-hand arrangements. Licensing schemes are designed to filter out non-compliant providers and shift responsibility for due diligence onto the host. Victoria and Queensland led the regulatory tightening from 2018. South Australia and the ACT followed. NSW and Western Australia did not.

Labour hire laws in NSW vs Victoria

The core comparison.

Element	New South Wales	Victoria
Licensing scheme	No standalone scheme	Labour Hire Licensing Act 2018, administered by the Labour Hire Authority
Regulator	None specific to labour hire	Labour Hire Authority (LHA), part of WorkSafe Victoria
Provider obligation	None to obtain a licence	Must hold a current LHA licence to provide labour hire services
Host obligation	None specific to labour hire licensing	Must only engage licensed providers; must check the LHA register
Licence check	Not applicable	Public register at labourhireauthority.vic.gov.au
Penalties	None for unlicensed labour hire activity per se	Up to approx. $600,000 for corporations providing labour hire without a licence; significant fines for hosts engaging unlicensed providers
Annual licence fee	n/a	Tiered based on provider revenue
Renewal	n/a	Annual
Fit and proper person test	n/a	Yes, applies to applicants and key personnel

National inconsistency, real-world consequences. A logistics provider running warehouses in Sydney and Melbourne can engage the same labour hire agency for both. If that agency is not LHA-licensed in Victoria, the Melbourne arrangement is unlawful while the Sydney arrangement is not. National workforce plans need to be built around the strictest state’s rules, not the weakest.

Do contractors need to be licensed under Victorian labour hire laws?

This is where most cross-border employers get caught.

Contractors and labour hire providers are not the same thing. A genuine independent contractor controls their own work, brings their own tools or equipment, can subcontract, carries their own ABN and PAYG obligations, and is engaged for a defined deliverable. A labour hire arrangement involves workers who are placed under the host’s direction and control.

Independent contractor arrangements: when they are exempt. True independent contractors are outside the scope of the Labour Hire Licensing Act. A specialist consultant engaged to deliver a project, with their own scope, tools, and methods, is a contractor. They do not need a labour hire licence and the host does not need to check one.

When contractor supply becomes labour hire under Victorian law. The Act captures any arrangement where workers are supplied to perform work under a host’s direction, regardless of how the parties describe themselves. Examples that have been treated as labour hire by the LHA:

• A “consulting firm” supplying ongoing IT contractors who work under the host’s day-to-day direction on the host’s site
• A “subcontractor” supplying cleaners under the host’s roster and supervision
• A recruitment agency that supplies temporary workers and continues to pay them
• A “consortium” model that supplies labour pooled across multiple providers

The “we use contractors” misconception. Calling the arrangement contracting does not make it contracting. The LHA looks at the substance: who pays the worker, who directs the work, who carries the employment obligations, who carries the back-fill risk. If those answers point to the provider being the employer and the host directing the work, it is labour hire and the licensing rules apply.

Recruitment agency arrangements. Permanent placement (finding a worker who is then employed by the host) is generally outside labour hire licensing. Temporary placement (where the agency continues to employ and pay the worker) is generally inside it. Many recruitment agencies operate both models; they need a licence for the temporary side.

IT contracting. A subset of IT contracting is treated as labour hire by the LHA. The triggers are usually: ongoing engagement, work performed at the host’s premises or systems, the agency paying the worker, and the host directing day-to-day work. Cross-border IT consultancies routinely get this wrong.

How to complete a labour hire licence check in Victoria

A five-step process that takes under two minutes.

Step 1: Visit the LHA public register. Go to labourhireauthority.vic.gov.au and click “Find a labour hire provider”.

Step 2: Search by provider name or ABN. Enter the trading name or the ABN of the provider. The ABN is the more reliable search because trading names change.

Step 3: Confirm current licence status. Look for a “Licensed” status, the licence number (format VICLHL followed by digits), and the issue date.

Step 4: Check expiry, conditions, and suspensions. The register shows the expiry date, any conditions attached to the licence, and whether the licence is currently suspended or under review. A provider whose licence has lapsed cannot supply labour hire services until they renew.

Step 5: Keep compliance records for your own due diligence. Save a screenshot or PDF of the register entry on the date you engage the provider. Store it with the host employer agreement. If the LHA or WorkSafe Victoria audits your supply chain, this is the evidence you took reasonable steps.

Why this matters. A Victorian host engaging an unlicensed labour hire provider can face penalties exceeding $400,000 per breach, plus the business disruption of the provider’s workforce being pulled off site. The LHA publishes enforcement outcomes regularly. The two-minute register check protects you from both.

Penalties for using unlicensed labour hire providers

Financial penalties for host employers. Victorian hosts engaging unlicensed providers face penalties of up to approximately $510,000 for corporations and approximately $130,000 for individuals per offence (penalty unit values are adjusted annually; check the current rate). Penalties stack per breach, so a host engaging an unlicensed provider across multiple weeks or workers can face multiples of the single-offence figure.

Business disruption and project delays. An unlicensed provider’s workforce can be ordered off site. If you are mid-project, mid-peak, or running a fixed-deadline contract, that disruption translates into lost revenue and damaged client relationships. The LHA has issued cease-and-desist orders on construction sites and warehouses; the operational impact is real.

Construction sector enforcement 2025-26. The Victorian construction sector has been a particular enforcement focus. The LHA has prioritised audits of subcontractor arrangements on commercial and infrastructure projects, with several high-profile enforceable undertakings published in 2025. The pattern continues in 2026.

Reputational risk. Public enforcement outcomes are on the LHA’s website. Brand-sensitive industries (retail, hospitality, food processing) carry reputational cost on top of the financial penalty.

2026 Victorian labour hire licensing changes employers must know

The LHA has signalled tighter enforcement and modest scheme changes for 2026.

Stronger fit-and-proper person tests. Applicants and key personnel face more rigorous assessment, including review of prior compliance history across other regulators (Fair Work, ATO, WorkSafe, ASIC).

Expanded disclosure obligations. Providers face more granular disclosure on workforce composition, paying-agent arrangements, and the corporate structure behind the licence.

Criminal history checks. Required for applicants and nominated officers, with broader scope on financial offences.

Greater scrutiny on provider compliance. Targeted audits of providers operating in high-risk sectors (horticulture, cleaning, meat processing, construction).

Increased enforcement powers. The LHA has flagged more frequent use of compliance notices, conditions on existing licences, and prosecution of repeat offenders.

For hosts, the practical impact is unchanged: engage only licensed providers, keep records of your licence checks, and audit your contractor arrangements against the labour hire definition.

Best compliance practices for employers operating across NSW and Victoria

A practical action list for national operators.

Conduct regular licence checks on all engaged providers. Quarterly is the minimum cadence. Run the LHA register check on each provider, document the result, file it with the host agreement. Annual is too long given the pace of suspensions and renewals.

Audit contractor arrangements against labour hire definitions. Walk through each ongoing contractor arrangement and ask: who employs the worker, who directs the work, who pays the wages, who carries the back-fill risk. If the answers point to your business directing the work but the provider paying the worker, the arrangement is probably labour hire and the provider needs a Victorian licence.

Use written agreements with clear PCBU obligations. The host employer agreement should specify the WHS responsibilities, indemnity, scope of direction, and termination notice. Vague or generic agreements are the source of most disputes after an incident.

Verify payroll and WHS compliance across the supply chain. Ask the provider for evidence of correct award application, current WorkCover policy, and recent payroll audit results. A licensed provider should be able to produce these without resistance.

Industries to apply the highest scrutiny to. Construction, warehousing and logistics, manufacturing and food processing, commercial cleaning, security, and horticulture. These are the LHA’s enforcement priorities for 2026.

FAQs about labour hire licensing in Australia

Is labour hire licensed in NSW?
No. NSW does not currently operate a standalone labour hire licensing scheme. Providers and hosts in NSW are still bound by Fair Work, WHS, payroll tax, and tax obligations, but not by a labour hire licence requirement.

Who needs a labour hire licence in Victoria?
Any business supplying workers to a host in Victoria, where the workers perform work under the host’s direction and the supplier retains the employment relationship. This catches traditional labour hire agencies, many contracting and subcontracting arrangements, and certain recruitment agencies that supply temporary staff.

Can contractors fall under labour hire laws?
Yes, if the arrangement has the substance of labour hire even if it is described as contracting. The LHA looks at who employs and pays the worker, and who directs the work. If the provider employs and pays the worker but the host directs the work, the provider needs a Victorian licence.

How do I check a labour hire licence in Victoria?
Search the public register at labourhireauthority.vic.gov.au. Enter the provider’s name or ABN, confirm the licence status, note the expiry date, and save a copy of the register entry for your records.

What happens if I use an unlicensed provider in Victoria?
As the host, you face penalties up to approximately $510,000 per breach for a corporation, plus the operational disruption of the workforce being ordered off site. Repeat or aggravated breaches face higher penalties and possible prosecution.

Does labour hire licensing apply to recruitment agencies?
It depends on the engagement model. Permanent placement (finding a candidate who is then employed by the host) is generally outside the scheme. Temporary placement (where the agency continues to employ and pay the worker) is generally inside it. Many recruitment agencies run both models and need a licence for the temporary side.