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Labour hire employers can’t hide behind client contracts

By Charles Power on September 12th, 2018
  1. Industrial Instruments
  2. Fair Work Act

 

A recent Fair Work Commission (FWC) decision has emphasised that labour hire companies cannot use client labour hire contracts to renounce their responsibility to treat employees fairly.

If the direct actions of a labour hire company are found to be unfair, they do not automatically cease to be unfair if they are indirectly carried out by a third party to the employment relationship.

In Star v WorkPac Pty Ltd (2018) a labour hire company supplied a machinery operator to a mine. The worker refused to comply with an instruction during her night shift to dump an ore load in an area that she said was too dark. Thereafter the worker’s employment was terminated when the labour hire company called to inform her that the mine operator and client of the labour hire agency had ‘demobilised’ her from the site.

The employer argued that it hadn’t dismissed the worker – rather the employment ended when the worker expressed her disinterest in working in other roles for the labour hire company.

However, the FWC rejected this argument, ruling that each assignment of the worker to a client was a separate employment relationship.

The FWC observed that the fact a labour hire company’s client has a contractual right to direct it to remove a worker from their site does not mean that there is a valid reason for the employer’s resulting dismissal on the grounds of incapacity of the worker to perform the inherent requirements of their position.

If the FWC considers a dismissal is unfair in all of the circumstances, it can be no defence that the employer was complying with the directions of another entity in effecting the dismissal.

In this case, the FWC ruled the dismissal was unfair because there was no discussion with the worker about the decision to remove her from the site and the consequential termination of her employment.

The employer accepted the directive from the client as a fait accompli and there was no attempt made to discuss the directive with the client or to confirm the reason for the directive or whether the regime in the labour hire contract with respect to unsatisfactory performance applied.

The labour hire contract provided for some rights to debate the issue of whether the worker’s performance was such that she should be removed from the site. The FWC found that the dismissal was harsh because of its consequences for her personal and economic situation and because there was no conduct sufficient to justify the dismissal.

You can learn more about the legislation surrounding labour hire companies in L1 Labour Hire in the Employment Law Practical Handbook.

Written by the workplace lawyers at Holding Redlich, the Handbook contains more than 80 chapters covering all areas of employment law.

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