A recent decision in the Supreme Court of New South Wales will
have a significant effect on the way liability is apportioned
between labour hire agencies and host employers when a hired
labourer is injured on the host employer's premises.
In the case of Hodge v CSR Limited, Justice Hislop found that
Adecco, the labour hire agency that directly employed the worker,
was fully indemnified by CSR, the host employer that had engaged
the agency to provide hire labour.
This case is a reminder that host employers need to make sure
they have adequate public liability coverage if they use labour
The facts of this case
The plaintiff in this case was an employee of Adecco, a labour
hire agency that had hired out the employee's services to
CSR directed the plaintiff to remove solidified concrete from a
concrete barrel, which was attached to a vehicle (known as
"de-dagging"). To carry out this task, the plaintiff had
to stand with a heavy full-sized jackhammer above his head for an
extended period of time. While undertaking this task, the plaintiff
developed pain in his neck and left shoulder, and was later
diagnosed with a prolapsed disc and a compressed nerve root.
While the plaintiff sued both Adecco and CSR, both companies
denied liability and attempted to cross-claim and seek indemnity
from each other.
Apportionment of liability
The Court found that although Adecco had breached its
non-delegable duty of care, that duty was not properly performed by
CSR, and therefore Adecco had not directly breached its duty to the
plaintiff for the following reasons:
Adecco had no direct involvement in or control over the work
site, nor did it have a supervisor on site. It was not involved in
the day to day work on the site, and had no knowledge that a full
sized jackhammer was being used.
Adecco had been supplying the plaintiff's labour to CSR for
at least three to four years, and may have been aware that
de-dagging would be carried out from time to time. However, this
task was only performed infrequently and on dates which were not
predictable, and so it was also unlikely that Adecco would have
observed this being carried out during a site inspection.
Even if Adecco had observed the de-dagging process during a
site inspection, it would have observed the work being carried out
using appropriate equipment as part of a safe system of work.
The plaintiff was experienced in his job.
The plaintiff had been provided with a safety handbook by
Adecco, which set out safety procedures and directed employees to
notify Adecco of any hazardous or potentially hazardous situations.
It also said not to undertake any tasks that were unsafe.
The Court found that no direct negligence by Adecco had been
established. As a result, there was no reduction in the liability
found against CSR.
Effect of the decision on host employers
The decision is significant in that it has altered the position
taken by the New South Wales Court of Appeal in TNT v Christie in
2003, which has been upheld since that time. That case held that
the labour hire firm was liable for 25 percent and the host
employer for 75 percent of the plaintiff's damages.
While each case will turn on its own facts, this recent decision
highlights the importance of taking out comprehensive public
liability insurance before engaging a labour hire agency to provide
workers for your site. In some circumstances, the labour hire
agency's insurance will not protect you.
For more information on this case or public liability insurance,
please contact HopgoodGanim's Insurance and Risk practice.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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