Australia: Labour hire employers: take care when dismissing casual employees

Last Updated: 30 June 2016
Article by Evan Willis

Most Read Contributor in Australia, September 2017

Kool v Adecco Industrial Pty Ltd [2016] FWC 925

The issues

The Applicant, Ms Kool, claimed she has been unfairly dismissed by labour hire firm Adecco when it told her she could no longer work at Adecco's client, Nestle. In response Adecco lodged a 'jurisdictional objection' to Ms Kool's application arguing that she had not been 'dismissed' as defined in the Fair Work Act because, effectively, she was still on their books and they were trying to secure new work for her. If Adecco's argument was accepted Ms Kool would not have been able to make an unfair dismissal claim.


Ms Kool was employed by Adecco as a casual and on-hired to Nestle for more than two years on a regular basis working up to 38 hours per week. Nestle accused her of misconduct by engaging in some behaviour that didn't align with Nestle's values including apparent gossiping and an allegation she had 'clocked' other employees in and out of work.

Nestle informed Adecco, pursuant to the labour hire contract between the companies, that it "no longer required" Ms Kool. Adecco accepted Nestle's decision and informed Ms Kool that her assignment at Nestle was ending immediately.

Because Adecco's response to Ms Kool's unfair dismissal claim included the argument that Ms Kool was still on their books and had not been 'dismissed' within the meaning of the Fair Work Act, FWC Deputy President Asbury, was called on to decide what 'dismissed' meant in this situation.

The legal framework

Under the Fair Work Act and employee is considered to have been 'dismissed' where the employment with the employer has been terminated 'at the employer's initiative'. This is the first step in any finding that a dismissal was unfair.

Was Ms Kool dismissed?

DP Asbury went to some lengths to point out the notable lack of convincing evidence tendered by Adecco to make its own case, so this decision must be treated with some caution.

Adecco argued that it was continuing to seek alternative placements for Ms Kool and produced evidence that Ms Kool had been offered a handful of short engagements. As such, Adecco argued, Ms Kool's employment had not been terminated. Adecco's alternative argument was that 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.

However, DP Asbury was satisfied that the situation amounted to a dismissal at the initiative of Adecco because:

  1. Ms Kool had worked the equivalent of full-time hours (and more) 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; and
  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.

The dismissal was unfair

DP Asbury also went on to find that the dismissal was unfair within the meaning of the Fair Work Act, principally because there was insufficient evidence to support a valid reason for the termination of her employment and because Adecco had not afforded Ms Kool a fair dismissal procedure in accordance with section 387 of the Fair Work Act.

Lessons for labour hire employers

This case provides labour hire employers with a number of useful reminders. Four key lessons are:

  1. Do not automatically assume a 'casual' has no unfair dismissal rights
  2. The FWC noted that Adecco management did not appreciate that a fundamental change to the terms and conditions under which an employee is working and a failure to offer work to a casual employee can both constitute dismissal for the purposes of the Fair Work Act;

  1. Do not hide behind the host entity
  2. Labour hire employers need to exercise their own diligence where an on-hired employee is no longer welcome at a client site and afford procedural fairness in the event of a dismissal;

  1. The onus is on you to provide evidence that supports your case
  2. The absence of evidence to support a number of its arguments counted against Adecco in this particular case. DP Asbury noted that Adecco did not provide evidence that was relevant to the nature of the employment relationship, the validity of the reason for termination and the dismissal procedure that was used.

  1. Document the nature and purpose of the relationship
  2. Adecco did not give the FWC any evidence of signed agreement between it and Ms Kool which could be referred to in support of the termination of her employment due to the wish of the client.

The lack of sound documentation differentiates this case from another labour hire unfair dismissal case handed down this year - Pettifer v MODEC Management Services Pte Ltd ([2016] FWC 3194). In that case Commissioner McKenna was willing to find the respondent employment agency had not unfairly dismissed an employee who had been contracted specifically to work on one client project and was dismissed after the client exercised its right to remove the employee from their site. The specific nature of the employee's contract in this case was influential in the FWC's finding that the termination was not harsh, unjust or unreasonable.

Labour hire employers should not assume they can opt out of unfair dismissal laws by treating the host entity as being the responsible party in all cases. The FWC, and Courts, will examine the nature of the relationship between all parties in assessing whether an employee has been dismissed and if so, unfairly.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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