Australia: Labour hire agreement justified termination of employment

Last Updated: 24 October 2016
Article by Laura Gallagher

An employee dismissed by a labour hire company at the request of a host employer was not unfairly dismissed, in circumstances where the labour hire employer was fulfilling a contractual obligation to remove an employee from the worksite.

In Pettifer v MODEC Management Services Pty Ltd [2016] FWCFB 5243 , the Appellant had worked for labour hire company MODEC Management Services Pty Ltd ('MODEC') since 2009, with an "unblemished" record. Pursuant to a contract between MODEC and BHP Billiton Petroleum Inc (BHPB) for the provision of labour for the 'Pyrenees Venture', the Appellant was placed at a BHBP worksite. Following what BHPB alleged to be a "near miss" incident, MODEC was directed by BHPB to remove the Appellant from the site . MODEC acceded to BHPB's direction to remove the Appellant.

The Appellant first instituted proceedings in the Fair Work Commission under the unfair dismissal provisions in Part 3 - 1 of the Fair Work Act 2009 ("the Act"). Section 394 of the Act provides relief to an employee who has been dismissed, if that dismissal is deemed harsh, unjust or unreasonable. Pursuant to section 387 (a) - (h), criteria for considering harshness includes, inter alia, whether there was a valid reason for dismissal relating to capacity or conduct, whether the person was notified of the reason and given an opportunity to respond, whether there was an unreasonable refusal to allow a support person and any other matters that the Fair Work Commission considers relevant.

The Appellant initially alleged, amongst other factors, that his termination was harsh, unjust or unreasonable as he had a lengthy period of service and an "excellent" employment record. The Respondent submitted it did not terminate the worker's employment due to any findings of misconduct, but rather through the enforcement of a clause in the contract between MODEC and BHBP, which provided BHBP could direct MODEC to remove an employee if it was in the best interests of the project.

At first instance, Commissioner McKenna held the termination was not harsh, unjust or unreasonable. In coming to this decision, the Commissioner did not believe the question of whether or not there was a valid reason for dismissal relation to capacity or conduct was relevant.

The Applicant appealed this decision to the Full Bench on the basis that the Commissioner erred in finding MODEC did not rely on the Appellant's capacity or conduct in its decision to dismiss him, and asserted he was, in fact, dismissed for a reason relating to his capacity or conduct as his dismissal occurred as a result of BHPB forming the view that "his conduct demonstrated unacceptable safety behaviour".

On appeal, the Full Bench quashed Commissioner McKenna's decision that there was no need to address whether or not there was a valid reason for the dismissal. Therefore, to determine whether or not there was a valid reason for termination, the Full Bench noted the reason must be judged not by the existence of a legal right to terminate, but by "the existence of a reason for the exercise of that right".

Considering the relevant clause in the contract, the Full Bench concluded that MODEC was contractually obliged to remove the Appellant from the site if instructed to do so, and that this being the case, the Appellant was no longer able to perform the inherent functions of his role with MODEC. Importantly, the Full Bench noted MODEC had sought to find alternative employment for the Appellant and it was only after exhausting alternative employment options that MODEC exercised its reason to terminate.

In its decision, the Full Bench noted the case of Kool v Adecco Industrial Pty Ltd T/A Adecco [2016] FWC 925, where it was held that an employer cannot rely exclusively on the actions of the third party as a defence to unfair dismissal. This case was distinguished from the present case, however, in that the factual situation was "somewhat different" and the terms of the contractual relationship in that case were not provided as evidence.

Further, the Full Bench considered in accordance with section 387 of the Act that the Appellant was notified of the reason for dismissal and was given an opportunity to respond. It was held there was no evidence of a refusal to allow a support person and the dismissal was not related to unsatisfactory performance. In consideration of other relevant factors, the Full Bench noted Commissioner McKenna's consideration of the extent to which MODEC made endeavours to obtain suitable employment for the Appellant.

The Full Bench ultimately held that MODEC was contractually obliged to remove the employee from the worksite. Accordingly, the Full Bench upheld the decision at first instance that the dismissal was not harsh, unjust or unreasonable.


The Full Bench noted the increasingly commonplace practice of labour hire arrangements whereby host employers have a contractual right to exclude a labour hire employee from its worksite. This case demonstrates that employees seeking protection under the Fair Work Act 2009 may not be successful in establishing that a dismissal was harsh, unjust or unreasonable where the employer is fulfilling such a contractual obligation.

Further, this case illustrates the importance of labour hire employers exploring suitable redeployment for an employee, in circumstances where they have had to remove them from a worksite.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.