The use of labour hire workers has become a common part of the resourcing mix for many workplaces. While their use remains contentious in some spheres, the surrounding legal framework has become relatively settled. Against that background, a decision of the Fair Work Commission in late 2020 sent ripples through the host company community when a labour hire worker was reinstated to work at a host's worksite.

The labour hire worker had worked at the host's worksite for around 3 years under a labour hire arrangement between the labour hire company and the host. Following a history of concerns and ultimately a safety related incident, the host required the labour hire company to remove the worker from the worksite. The worker was subsequently dismissed, and commenced unfair dismissal proceedings against the labour hire company.

Following a finding that the dismissal was harsh, unjust and unreasonable, the Commission member turned to the issue of remedy, and the worker's request for reinstatement. Relevant to the decision, the Commission member noted:

  • The terms of the labour hire contract are relevant to the Commission's decisions, but only if those terms have been disclosed to the Commission (which had not occurred in this case).
  • The Commission will not presume that a labour hire company is contractually obliged to remove a worker from a host's worksite if required by the host.
  • A labour hire company's mere compliance with a request from a host to remove a worker will generally not be a valid reason to terminate the employment - the labour hire company must establish that they were contractually obliged to do so if they wish to assert an incapacity of the worker to perform the inherent requirements of their position.
  • The Commission will also take account of any failure by a labour hire company to form an independent view regarding the alleged misconduct.

Ultimately, the Commission determined the worker was to be reinstated, and that he should be reinstated to the host's worksite.

Although not a party to the original decision, the host was granted permission to appeal and in doing so put a copy of the labour hire contract into evidence. The contract established the right of the host to require the labour hire company to remove the worker, and the obligation on the labour hire company to do so. With the benefit of the contract, the Full Bench of the Commission quashed the order for reinstatement to the host's site, observing "[h]aving had the benefit of seeing the Contact, it's clear to us that the [worker] was incapacitated from working at the [host's] site because [the labour hire company] has no contractual power to force the [host] to allow the [worker] access to their site after his removal. The order to reinstate the [worker] to the . site was inappropriate in all the circumstances."

The decision reinforces a number of important messages for both hosts and labour hire companies.

  • The terms of your labour hire contract are important, particularly as it relates to the right of a host to require a labour hire company to remove a worker, the obligation on the labour hire company to do so, and the right of the host to exclude the worker's return.
  • Despite the obligation to remove a worker, the labour hire company may need to form an independent view as to the alleged misconduct, and may require the co-operation of the host to do so.
  • The terms of the employment contract between the labour hire company and worker are also important. Although not always itself determinative, labour hire companies should ensure that the conditions of the worker's employment are clear and documented. If a worker is employed to work at a specific site, the contract should note that, and should also note the consequences for the employee of being removed from that site.
  • When defending an application from a former worker, you can take nothing for granted. Generally, a Court or tribunal will only make a finding if you have first given them the evidence to do so. Merely saying something is true will not be enough.

People + Culture Strategies regularly work with our clients in both the legal and strategic aspects of labour resourcing and management. Through our workplace audits, strategic consulting and training programs, we ensure our clients have both the right operational structures in place, and the systems and people capabilities to embed their success.