Labour Hire workers and Unfair Dismissals

What is a Labour Hire Worker?

The definition of a labour hire worker is a person (worker) who signs a work contract with an agency firm. Examples are nursing agencies, security agencies etc.

In turn the agency has a commercial contract to supply labour to a prospective employer business.

Under that agreement the worker is then sent to work for the employer business. 

Generally, the employer business pays the agency for the worker’s work, and the agency then pays the worker.  

The worker has no contract with the employer business their only contract is with the agency firm.

Given they have no contract with the employer business a labour hire worker is not considered an employee of the employer business. .

To demonstrate, in Re Advanced Australian Workplace Solutions Pty Ltd, the Court overturned a finding that the worker was an employee. In this case, the worker had entered a contract with a labour hire company, and sent to work with the host employer business, given this the Court found that there was no contractual relationship between the worker and the host employer business, and the only contract for work existed with the agency who interviewed the worker and then provided his services under a separate agreement between the agency and the host employer business. 

But there are exceptions!

As, it will depend on the structure of the agency and host employer business. For instance, in Damevski v Giudice the Court found the worker was an employee of the host employer business this was due to the re-structure of the agency and employer business. In this case, the worker had been employed as a cleaner by a company called Endoxos. Endoxos then restructured its operations so that the worker and other employees would become contractors instead under a labour hire arrangement. However, the worker continued to perform the same work for Endoxos as a cleaner under its direction and control, using its equipment and in its uniform, the Court found that regardless of the labour hire definition in this case the worker was an employee of Endoxos still.

Even if the structure of the agency and host employer business is not in issue there may be other avenues for unfair dismissal with the agency themselves.

For instance, in Star v WorkPac Pty Ltd T/A WorkPac Group, the worker filed an unfair dismissal action against the agency after she was terminated from the host employer business.

In this case, she worked as a casual machinery operator, she had a contract with a  labour hire agency called WorkPac. WorkPac in turn had an agreement with BHP for the supply of workers. Subsequently, she went to work with BHP. WorkPac was then directed by, BHP to remove the worker from their site.

When the worker asked WorkPac why this was occurring, a WorkPac personnel said that they did not know the reason, but that the ‘demobilisation’ was not related to the her performance. Workpac also told the worker they would email a termination letter to shortly to her. This was understood by the worker that her employment was terminated. From that point the worker had no further income source from WorkPac.   

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

The Commission also then found there was no valid reason for the removal of the worker from the site leading up to the dismissal, and that WorkPac failed to consider alternative assignments before terminating the worker’s employment. The Commission further found that the dismissal was unfair.  

Therefore, the WorkPac case shows that unfair dismissal is still available but the respondent to the action should be the labour hire agency and not the host employer business.