A labour hire worker is someone who enters into a work contract with a labour hire agency. The labour hire agency has a commercial contract to supply labour with a host firm. The worker performs work for the host firm. The host firm pays the labour hire agency, and the labour hire agency then pays the worker. The worker has no contract with the host firm and as a result cannot make an unfair dismissal claim against the host firm. An example of this is a nurse working for a nursing agency.
This arrangement is set out in the diagram below, adapted from Stewart’s Guide to Employment Law:
Labour hire agency
Performance of work
Australian Courts have found that the interposition of a labour hiring agency between the agency’s clients and the workers the agency hires out to them does not result in an employee-employer relationship between the client and the worker. In those cases, in general, the hiring agency interviewed and selected the workers, and determined their remuneration, without reference to the client. Usually, a client requesting a worker with particular skills was provided with one, who may or may not have been ‘on the books’ of the hiring agency at the time the order was placed. The workers of such hiring agencies were usually meant to keep the agency informed of their availability to work, and in many cases were not to agree to undertake work for the client which had not been arranged or directed by the hiring agency. Equipment was either supplied by the worker themselves, or by the hiring agency, except for specialist safety equipment which the client often supplied. Dismissal of a worker was only able to be effected by the hiring agency. The client can only advise the hiring agency that the particular worker is no longer required by it. 
In some situations the labour hire agency and the host employer may be related entities. If this is the case, the host employer may be found to be the employer, regardless of the contract for work with the labour hire agency.