The financial implications of labour hire licensing: Budgeting for compliance in your recruitment agency

If you’re starting or scaling a recruitment agency in Australia, obtaining a labour hire licence is one of the most important steps to ensure your business operates legally and ethically. But it’s not just a legal requirement — it’s a significant financial consideration.

Understanding the true cost of labour hire licensing and building it into your budgeting and planning is essential for long-term success. At RecruitArt, we help recruitment entrepreneurs navigate this process every day, and we know where agencies often overlook key costs.

Here’s what every recruiter should know before applying for a labour hire licence.

What is a labour hire licence and why does it matter?

A labour hire licence is mandatory for recruitment agencies that place workers with third-party clients under labour hire arrangements. These regulations exist in several Australian states, including Victoria, Queensland, and South Australia, with each having its own specific requirements.

Operating without a valid labour hire licence can result in hefty penalties, loss of clients, and even permanent bans from the industry. But compliance isn’t just about ticking boxes — it’s about building a sustainable, trustworthy brand that clients and candidates can rely on.

The visible and hidden costs of labour hire licensing

Most agency owners budget for the application fee, but there are several additional — and sometimes hidden — costs that need to be considered. Let’s break them down:

1. Application fees

Application fees vary depending on your location and the size of your business. For example:

  • In Victoria, fees can range from around $1,100 to over $5,500 annually, depending on your turnover.

  • In Queensland, a tiered fee structure applies, with similar ranges.

2. Annual renewal fees

Labour hire licences are not a one-time investment. They must be renewed annually, with fees similar to the initial application. Make sure this is factored into your recurring business expenses.

3. Background checks and documentation

You’ll need to provide extensive documentation, including:

  • Proof of compliance with taxation and superannuation obligations

  • Proof of WorkCover insurance

  • Criminal history and ‘fit and proper person’ checks for business directors

These processes often involve costs for verification services or legal advice.

4. Professional consultation

While you can apply on your own, many successful agencies work with consultants like RecruitArt to ensure the application is correct the first time. Mistakes can result in delays or rejections — which cost even more in the long run.

Unexpected compliance costs to budget for

Beyond the application itself, there are ongoing compliance costs that often catch agencies off guard:

Staff training

You must train your internal staff to understand and manage labour hire compliance obligations — especially around fair work practices, record-keeping, and dispute resolution.

Insurance upgrades

Labour hire licensing often requires higher levels of insurance coverage, such as:

  • Public liability insurance

  • Professional indemnity

  • Workers’ compensation insurance for all placed workers

Record management and audits

Agencies must maintain comprehensive records on payroll, work hours, tax payments, and contracts. Investing in HR software or cloud-based systems can help streamline this — but comes at a cost.

Budgeting tips for your recruitment agency

Here’s how to budget smartly while staying compliant:

  1. Create a dedicated compliance budget line. Include licensing, legal, insurance, and training costs.

  2. Forecast for growth. If you’re planning to expand into other states or grow your client base, account for increased compliance needs.

  3. Engage compliance partners. Work with professionals like RecruitArt who understand the intricacies of state-by-state labour hire laws.

  4. Review costs annually. Legislation can change, so it’s essential to revisit your budget every year.

How RecruitArt can help

At RecruitArt, we specialise in supporting recruiters across Australia to launch, grow, and stay compliant. From helping you prepare documentation to guiding you through the application process and setting up your agency for success — we make labour hire licensing stress-free.

Thinking about starting your own recruitment agency or unsure about licensing requirements?
Let us help you take the guesswork (and hidden costs) out of the process.

👉 Book a free strategy call 
👉 Learn more about labour hire licence support