The labour hire market has grown steadily over many years. In June 2023, the Australian Bureau of Statistics reported that 327,100 people had a job in the labour supply services sector and for 82.7 per cent of these workers, it was their main job. This total number of workers in the sector equates to 2.3 per cent of the employed workforce. In addition, the Australian Bureau of Statistics reported that 81.2 per cent of labour hire workers worked full time.
In the context of these statistics, the Fair Work Commission's decision in Dung Thai vs Adecco Group [2024] FWC 2292 (Thai v Adecco Group) provides a reminder of the flexibility that this work structure offers and highlights certain actions that are required to manage a labour hire workforce.
The decision in Thai v Adecco Group
On 7 September 2023, Mr Thai was employed by Adecco on a casual basis and given his first client assignment commencing 11 September 2023 (assignment). A workplace issue arose during the assignment around 1 May 2024, and on 10 May 2024, the assignment was immediately terminated. Mr Thai claimed that he had been dismissed and filed an unfair dismissal application on 22 May 2024 (application).
Addeco raised a jurisdictional challenge to the application on the basis that Mr Thai had not been dismissed and remained its employee, albeit not on assignment. Evidence presented showed that Adecco had offered Mr Thai alternative assignments and that he had submitted medical certificates regarding his fitness for work after the alleged dismissal date. This conduct was contrary to his claim that his employment had ended.
Relevantly, Commissioner Perica made the following comment concerning the nature and function of labour hire in the context of the Australian workforce:
"The engagement of externally employed casual labour hire has proliferated in Australia over the last two decades. The business model is a risk shifting exercise for the host employer. Rather than directly employing workers to deal with work surges, businesses engage externally employed labour hire workers. These externally employed workers come without the on-costs associated with direct employment or the legal regulation of the process of ending a direct employment relationship. The contract between the host and the labour hire provider is structured to ensure that the labour hire workers on assignment can be added or removed at will by the host. This sometimes has unfortunate consequences for the labour hire employees where their long–term assignments are ended abruptly."
Overall, Commissioner Perica concluded that Mr Thai was not dismissed from his employment at Adecco and dismissed the application for lack of jurisdiction.
A timely reminder for government agencies
This decision is a timely reminder of how labour hire works, but it does not suggest that government agencies and state owned corporations can adopt a 'cavalier' approach. While Commissioner Perica's statement in Thai v Adecco Group highlights the nature of labour hire and its place in workforce management, host employers must also consider a range of other important factors. These considerations include the following:
- the decision of the host to cease an assignment is not at 'large'. It is bounded by relevant anti-discrimination legislation and, in certain circumstances, may also fall within section 550 of the Fair Work Act 2009 (Cth). It is not just the decision to cease the assignment. This legislation can apply during the assignment
- each labour hire worker will be a "worker" under relevant Work Health and Safety legislation. The host employer needs to ensure the health and safety of the "worker" so far as is reasonably practicable. This includes eliminating , or if not possible, minimising both physical and psychosocial risks, including those that arise peculiar to their status as a labour hire worker
- the host employer will need to ensure it complies with the terms of the agreement with the labour hire provider.
This list is from the perspective of the labour hire "worker". In addition, each government agency and state owned corporation needs to consider each of those subject matters from the perspective of its own employed workforce, in particular at points of interaction and co-working with its labour hire workforce.
With the law increasingly looking to be agnostic to the form of engagement when it comes to work being performed, this form of engagement will continue to be the subject of reform and change. Government agencies and state owned corporations will need to regularly review the architecture of their systems and procedures for how they onboard, manage and off-board their labour hire workforces.
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.