Labour hire workers

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Overview

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:^[1]

Labour hire agency
Work contract

Commercial contract
1. Worker
2. Performance of work
3. Host firm

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. ^[2]

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.

Case examples

Employee of respondent

Damevski v Giudice

Damevski v Giudice [2003] FCAFC 252 (13 November 2003), [(2003) 133 FCR 438].

The applicant had been employed as a cleaner by Endoxos. Endoxos then restructured its operations so that the applicant and other employees would become contractors under a labour hire arrangement with another company. The applicant continued to perform the same work for Endoxos as a cleaner under its direction and control, using its equipment and in its uniform.

The applicant was held to be the employee of Endoxos.

NOT employee of respondent

Re Advanced Australian Workplace Solutions Pty Ltd

Re Advanced Australian Workplace Solutions Pty Ltd, Print S0253 (AIRCFB, Giudice J, McIntyre VP, Redmond C, 25 October 1999).

The Full Bench overturned a finding that the applicant, who had entered into a contract with a labour hire company, was in fact the employee of the host employer to which the applicant had been assigned to perform work.

The Full Bench found that there was no contractual relationship between the applicant and the host employer.

Employee dismissed by respondent when host employer removed access to site

Star v WorkPac Pty Ltd T/A WorkPac Group

Star v WorkPac Pty Ltd T/A WorkPac Group [2018] FWC 4991 (Asbury DP, 28 August 2018).

The applicant in this unfair dismissal application worked as a casual Machinery Operator at the Goonyella Riverside Mine for WorkPac, a labour hire company. WorkPac was directed by its client, BHP Billiton Mitsubishi Alliance (BMA), to remove the applicant from their site. When the applicant asked WorkPac why this was occurring, a WorkPac representative said that she did not know the reason, but that the ‘demobilisation’ was not related to the applicant’s performance. The representative also said that she would email a termination letter to the applicant. The applicant understood from this conversation that her employment was terminated. The applicant had no ongoing employment or income from WorkPac after that point.

The Fair Work Commission found that the applicant was dismissed when WorkPac complied with BMA’s direction to remove her from their site. The Commission considered whether WorkPac had a valid reason for the dismissal related to the applicant’s capacity or conduct. The Commission found that there was an inference that a conduct issue related to the direction to remove the applicant from the site existed, however WorkPac failed to make any enquiry of BMA to establish the reasons. On the balance of probabilities the Commission found the reason for the direction to remove the applicant from the site was related to conduct.

The Commission found there was no valid reason for the removal of the applicant from the site leading up to the dismissal, and that WorkPac failed to consider alternative assignments before terminating the applicant’s employment. The Commission found that the dismissal was unfair. The Commission held the provisional view, with some reservations, that reinstatement was an appropriate remedy. The Commission provided an opportunity for the parties to consider their positions in relation to reinstatement.

Reference

^[1] A Stewart, Stewart’s Guide to Employment Law (4th ed, 2013) at p. 69.

^[2] Damevski v Giudice [2003] FCAFC 252 (13 November 2003) at paras 173–174, [(2003) 133 FCR 438].

Updated time

Last updated

15 January 2020

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