Australia: Can the employers duty of care be transferred?

Non delegable duty, transfer of duty, vicarious liability and transfer of liability by contract

Who should read this

Employers, including labour hire providers, host employers, principals and other contractors.

Things you need to know

Queensland Courts impose a heavy onus of proof on labour hire employers regarding whether they have assigned a worker pro hac vice (or for that occasion) to a host employer. The issue was most recently ventilated before the Queensland Supreme Court in Paskins v Hail Creek Coal Pty Ltd & Anor [2017] QSC 190.

In that case, the labour hire employer sought unsuccessfully to escape vicarious liability for the negligence of a worker on assignment with a host employer by arguing that control over the worker had passed to the host.

This was particularly relevant because the labour hire employer had given the host a contractual indemnity for all claims arising from the negligence of its workers. As the labour hire company's employee's negligence caused the incident, and his employment had not passed to the host, the labour hire employer was obliged to indemnify the host employer for its liability to the Plaintiff.

Facts

The Plaintiff, an employee of Hail Creek Coal Pty Ltd (Hail Creek), the mine operator, suffered a back injury on 16 August 2013 when the tray of his reversing truck collided with the lowered bucket of an excavator. The Plaintiff was operating a truck being loaded with ore by an excavator. The excavator was being operated by Mr Phillips, an employee of WorkPac Pty Ltd (WorkPac), pursuant to an agreement between Hail Creek's parent company and WorkPac.

The Plaintiff claimed damages for his injuries against Hail Creek and WorkPac.

Findings

Justice McMeekin found that Mr Phillips' negligent operation of the excavator was the cause of the incident. In particular, Mr Phillips had lowered the excavator bucket to a height which was not appropriate, particularly given there was a mound of dirt in the area where the Plaintiff was reversing, and failed to warn the Plaintiff of the impending collision through sounding his horn.

WorkPac employed Mr Phillips and would ordinarily be vicariously liable for his negligence. However, WorkPac sought to escape liability on the basis that control over Mr Phillips had passed to Hail Creek, and that Mr Phillips had 'effectively subsumed into the system of work', rendering Hail Creek his employer for that occasion.

WorkPac contended that Hail Creek trained and inducted Mr Phillips, employed and directed all supervisors at the site, directed the system of work and determined the site rules and developed and implemented the written procedure for loading trucks with ore.

In response, Hail Creek relied on evidence that WorkPac had an office and supervisors on site. WorkPac employed Mr Phillips as an experienced operator. Further, the contract between Hail Creek and WorkPac preserved WorkPac's entitlement to control its workforce, including Mr Phillips.

Justice McMeekin considered it a heavy onus of proof on WorkPac to prove that Mr Phillips' employment had transferred to Hail Creek. Such an onus could only be discharged by an employer in exceptional circumstances. Justice McMeekin found that Mr Phillips subjected himself to the control of Hail Creek because that is what his employment with WorkPac required him to do. There was no transfer of employment and WorkPac remained vicariously liable for the negligence of Mr Phillips.

Justice McMeekin was not persuaded that the incident was caused due to any defect with Hail Creek's system of work. However, he was prepared to find that Hail Creek had breached its 'non delegable duty of care' to the Plaintiff as his employer.

In this case, WorkPac had given a contractual indemnity to Hail Creek and was obliged to indemnify Hail Creek for all liabilities caused by the negligent acts or omissions of its employees. As Mr Phillips was an employee of WorkPac and his negligence caused the incident, WorkPac was obliged to indemnify Hail Creek for its liability to the Plaintiff.

Comments

This case highlights that it is exceptionally difficult for a labour hire employer to avoid responsibility for acts of negligence perpetrated by its employees in Queensland. The Court has emphasised that the onus of proof is a 'heavy one' and will only ever be overcome in exceptional circumstances.

This case also serves as a timely reminder to labour hire employers to consider the impact of indemnity clauses and to ensure that they are insured for the risks that they contractually assume to principals.

Of interest is the different approach in New South Wales, as demonstrated in cases such as Kabic v Workers' Compensation Nominal Insurer (No 3) [2017] NSWSC 1281 (Kabic). While the issue in Kabic was focused on a labour hire employer's obligations to its own injured employee, it explored the consideration about whether the employment of a worker by a labour hire company had been transferred to the host as a 'de facto' employer. The New South Wales Supreme Court accepted that, as the labour hire employer had 'no control' over the building site where the worker suffered injury, the host employer was 100% liable for the Plaintiff's injuries.

Conclusions

The above decisions emphasise that:

  • employers in Queensland are still found to owe a 'non delegable duty of care' to workers which cannot be avoided, except through the artifice of a contractual indemnity, and
  • employment for that occasion in Queensland still does not have traction, however in New South Wales there may be a finding of a 'de facto employment' if control over the worker has passed.

As always, employers and parties that contract with them should be aware of these principles, the meaning and effect of any contracts they enter into and should ensure that they have appropriate insurance in place to meet any risks assumed under contract.

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.

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