Lessons for Labour Hire Employers

Lessons for Labour Hire Employers

Two recent court cases have highlighted some of the issues that should be considered when hiring your employees out to third parties.

Kool v Adecco Industrial Pty Ltd [2016] FWC 925

Ms Kool was employed by labour hire firm Adecco as a casual and had been on-hired to Nestle for more than two years. Nestle accused Ms Kool of misconduct by engaging in behaviour that was contrary to Nestle’s values.  Nestle advised Adecco that it “no longer required” Ms Kool. Adecco accepted Nestle’s decision and Ms Kool’s assignment with Nestle came to an end.

Ms Kool then claimed that she has been unfairly dismissed by Adecco. In response, Adecco argued that she had not been ‘dismissed’ because she was still on Adecco’s books and they were still trying to place her with alternative host employers. Adecco’s alternative argument was that even if her employment had been terminated, the placement at Nestle had ended at Nestle’s initiative and therefore the dismissal was not ‘at the initiative’ of Adecco.
The Fair Work Commission rejected both of Addeco’s arguments and found that the situation did amount to unfair dismissal under the Fair Work Act because:

  1. Ms Kool had worked the equivalent of full-time hours during her placement at Nestle;
  2. Adecco’s work with Nestle did not come to an end. Adecco continued to place employees with Nestle. It was only when Nestle alleged misconduct against Ms Kool that her services were withdrawn;
  3. Following Ms Kool’s placement at Nestle ending, Adecco offered Ms Kool very little alternative work and the work it did offer was sporadic and uncertain whereas her work at Nestle was certain and ongoing;
  4. There was insufficient evidence to support a valid reason for the termination of her employment and Adecco had not afforded Ms Kool a fair dismissal procedure.

The key messages to take away are that:

  1. Casual employees have unfair dismissal rights too;
  2. A failure to offer work to a casual employee may be considered a dismissal;
  3. Labour hire companies still need to ensure that all due diligence is undertaken and that procedural fairness is exercised even if the host employer wants to terminate a placement; and
  4. The type of relationship should really be documented. For example, if there had been any evidence of an agreement between Adecco and Ms Kool which expressly allowed for the termination of her employment due to the client’s instructions, the outcome may have been different.

Kelly v Bluestone Global Ltd and Anor [2016] WASCA 90

Mr Kelly was employed by Ngarda Mining and Civil Pty Ltd (Ngarda) at the BHP Billiton owned Yarrie mine. During the course of his employment, Mr Kelly allegedly sustained injury as a result of the negligence of another worker known as Mr Scanlan. Mr Scanlan was employed by a labour hire company and performed work for Ngarda.
Mr Kelly claimed that the labour hire company was vicariously liable for the actions of Mr Scanlan. Mr Kelly was unsuccessful in his claim for two reasons:

  1. Mr Kelly failed to establish that Mr Scanlan had breached his duty of care to Mr Kelly; and
  2. Control over Mr Scanlan had been completely transferred to Ngarda and, accordingly, the labour hire company was not vicariously liable for Mr Scanlan’s negligence (if any).

It is important to note that the outcome of this case was very dependent on the individual facts of the case. In considering whether there had been a complete transfer of control, evidence was provided to the effect that:

  1. Ngarda provided all inductions and training, coordinated all works, conducted safety inspections and arranged transport and onsite accommodation for Mr Scanlan;
  2. The terms of the contract between the labour hire company and Mr Scanlan identified his obligation to submit to the directions of Ngarda;
    The labour hire company had no involvement in the day to day operations onsite;
  3. There was no onsite differentiation between labour hire employees and Ngarda employees;
  4. Most workers supplied by the labour hire employer were made permanent Ngarda employees after three months; and
  5. The labour hire employer’s role was confined to paying wages only.

However, in this instance the key message to takeaway is that each matter will turn on its own facts, particularly with respect to the actual level of control over the workers and the history of the relationship between the parties. No two labour hire companies are the same and each labour hire company needs to consider its own individual circumstances.

Disclaimer – This article was intended to be a general overview of basic legal concepts, NOT legal advice.  As each situation varies, it is recommended that individuals seek the advice of a qualified lawyer if needed.

Last Updated: 25 July 2016
Article by Richelle Cuthbertson, Compete Contract Solutions Pty Ltd

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