Labour hire licence fraud is not only a problem for providers. If a business poses as a licensed provider and you sign with it, the host is the one with the workers on site, the questions about their wages and a possible conversation with the regulator.
The Labour Hire Authority, which licenses providers in Victoria, lists the warning signs on its Labour Hire Authority host page. This guide turns those signs into plain red flags you can spot in a quote, a bank detail or a company name before you sign or pay.
How licence fraud reaches a host
The Authority defines licence fraud as people misrepresenting themselves as a licensed provider. It says it can expose hosts to the risk of involvement with criminal elements and the risk of taking part directly in unlawful conduct. It also hurts licensed providers, who can be targets of fraud and are undercut unlawfully, and it raises the risk that workers lose wages or entitlements.
The stakes for a host are practical. Victorian law requires labour hire providers to be licensed and hosts to use only licensed providers, and the Authority says substantial penalties may apply to a host that engages an unlicensed provider. Its host page has the current amounts. The Authority also says hosts may be investigated or required to produce documents.
Fraud works by looking like the real thing, so the signs are all mismatches. Running the register check itself, including across states, is covered in our post on the licence check across states. This guide looks at what a fake labour hire licence and its paperwork tend to get wrong.
Paperwork and bank account signs
The Authority's potential indicators of licence fraud for hosts include:
- Paperwork that cannot be verified. The Authority gives licences, bank statements and contact details as examples of documents to be wary of.
- Details that do not match the register. Any provider information that does not match the Labour Hire Licence Register is a flag.
- Bank account names that do not fit. The Authority points to names that either do not match a licensed provider or that frequently change.
The Authority says a host should not rely on paper documentation, because it could be illegitimate or out of date. Its checklist also suggests checking how old the provider's company is and asking for evidence of its company structure.
Money is where a fake provider is hardest to hide. Treat any labour hire bank account change as a prompt to check, not a routine admin update. A practical habit, and our suggestion rather than an Authority rule: hold the payment and confirm the new details with the contact listed on the register, not with the person or email that asked for the change.
Phoenix activity: what it is and the signs to watch
The Authority describes illegal phoenix activity as a company being liquidated, wound up or abandoned in a deliberate attempt to avoid paying its debts. A new company is then started to continue the same business activities without the debts. The Authority says it harms legitimate businesses, which are put at a competitive disadvantage, and employees, who miss out on wages, super and entitlements. The community also loses revenue.
Hosts can protect themselves by looking out for four signs the Authority lists:
- Quotes lower than market value. Covered in the next section.
- Directors with a history. Company directors previously involved with liquidated entities.
- Payment redirected. Requests for payments to a new company or bank account.
- Same people, new name. Changes to a company's directors and name, while the manager and staff remain the same.
These are signs to look out for, so treat each one as a reason to ask more questions and not as a verdict. A change of company name or director can have an ordinary explanation. What matters is that the answer makes sense and matches the register. The point is to check, not to accuse.
A price that is too low
"Quotes lower than market value" sits on the Authority's phoenix list, which is why a very low price deserves a second look. It is one indicator and not proof that a supplier is doing anything wrong. The Authority's host page gives no percentage or rule for what counts as lower than market value, so there is no figure to test against.
Our suggestion is to read a low price alongside the other signs. A cheap quote from a company that has changed its name and asks for payment into a different account tells a different story from a cheap quote that matches everything on the register. How a charge rate breaks down is a topic for a separate guide.
If you buy through a formal process, price is only one of the things you weigh. Our posts on buying labour hire and on staffing tender scoring cover how a tender compares suppliers, and a post on labour hire tender opportunities shows the licence check from the bidder's side.
What to do if something does not match
Stop before you sign or pay. The sequence below is built on the Authority's host checklist, with the order being our suggestion:
- Pause. Do not sign, start workers or pay until the mismatch is explained.
- Compare. Check that the company offering services is the one on the register, and note who is named as running the business, including any nominated officers.
- Confirm. If the person approaching you is not one of those people, the Authority says to confirm their connection to the licensed provider and their authority to act, and to ask to see an identity document. It also says to contact the nominated officer using the details on the register.
- Record. Keep a record of these checks, as the Authority asks.
- Report. Use the Authority's Report a Problem tool.
You can also look up a provider and subscribe to Follow My Providers, which notifies you of changes to its licence status, through the Authority's licence register tools. If you think you may already have engaged an unlicensed provider, talk to your adviser.
Related Resources
- Labour Hire Authority host page
- Licence register tools
- Licence check across states
- Buying labour hire
- Labour hire tender opportunities
- Labour hire in Melbourne
Common Questions About Labour Hire Licence Fraud
1. What is licence fraud in labour hire?
The Labour Hire Authority describes it as people misrepresenting themselves as a licensed provider. It can expose a host to involvement with criminal elements and to taking part in unlawful conduct, and it raises the risk that workers lose wages or entitlements. Its indicators include unverifiable paperwork, details that do not match the register, and bank account names that do not match or keep changing.
2. What is illegal phoenix activity?
It is where a company is liquidated, wound up or abandoned in a deliberate attempt to avoid paying its debts, and a new company then continues the same business activities without them. The Authority says employees miss out on wages, super and entitlements. The Authority's signs for hosts are low quotes, directors tied to liquidated entities, payment requests to a new company or account, and a new name with the same manager and staff.
3. Why does a very low quote matter to a host?
Quotes lower than market value are one of the signs the Authority lists for illegal phoenix activity. It is a sign and not proof, and the host page gives no figure for what counts as lower. A cheap quote is a reason to ask more questions, such as who runs the business, how old the company is and whether every detail matches the register.
4. What should I do if a supplier's bank details change?
The Authority lists bank account names that do not match a licensed provider or frequently change as a licence fraud indicator, and requests for payment to a new company or bank account as a phoenix sign. Our suggestion is to pause the payment, confirm the change with the contact listed on the register and keep a record of what you were told.
5. How do I report a suspected unlicensed or fraudulent provider?
Use the Authority's Report a Problem tool, which is linked from its host page. The Authority takes reports about attempted licence fraud, unlicensed providers, hosts engaging unlicensed providers, mistreated workers and unlawful behaviour. Keep a record of the checks you made, since the Authority's own checklist asks hosts to do that.
Match the Paperwork to the Register
Licence fraud and phoenix activity both show up as small mismatches: a document you cannot verify, a name that changes, an account that moves, a price that looks too low. Match what you are shown to the register, keep a record of what you checked and report what does not add up. Chandler Personnel is an independent, Melbourne-based blue collar specialist, and whichever provider you consider, the register is where you check it. If you want to talk about labour hire in Melbourne, you can request staff once your own checks are done.
