Dismissing on-hired employees: A cautionary tale - Unfair/ Wrongful Dismissal

In Tasmanian Ports Corporation Pty Ltd t/a Tasports v Gee [2017] FWCFB 1714 (18 May 2017) (Tasports), a Full Bench of the Fair Work Commission has clarified the obligations of labour hire employers when dismissing an employee.

The decision in Tasports makes it clear that, when determining whether to dismiss an employee, labour hire companies cannot simply rely on the process adopted by a host business.

THE FACTS OF THE CASE

Tasmanian Ports Corporation Pty Ltd (Tasports) is a State-owned company which owns and operates a number of ports in Tasmania. It also engages in a number of other commercial activities, including supplying labour to privately-owned ports. Amongst its clients is Grange Resources Limited (Grange), a mining company which processes and ships iron pellets on the north coast of Tasmania.

Mr Gee was an employee of Tasports for a number of years, and was assigned to work for Grange from 2009 until his dismissal in August 2015.

The termination of Mr Gee's employment occurred following advice from Grange to Tasports that it would be terminating Mr Gee's access to its premises with effect from 17 August 2015. That decision was triggered by an investigation into Mr Gee's alleged failure 'to follow a reasonable work and deployment directive' on 13 August, and into earlier incidents allegedly involving:

the posting of unauthorised photos of Grange's assets and work sites, circumventing Grange's reporting protocols; and
being in unauthorised possession of a mobile phone.

Although Tasports was made aware of this investigation, Mr Gee was not advised of its existence or given any opportunity to respond to the matters that were considered as part of the investigation.¹

While Tasports subsequently gave Mr Gee an opportunity to respond to these allegations, there was no evidence to suggest that Mr Gee's responses were ever communicated to Grange.²

On 28 August, Tasports wrote a letter to Mr Gee advising him that:

he had been excluded from Grange's premises and was therefore unable to perform the 'inherent requirements' of his position;
there were no alternative available positions/duties he could perform at Tasports; and
in consequence, he had been removed from Tasports' employment roster.³

Mr Gee subsequently lodged a claim for unfair dismissal with the Fair Work Commission (FWC).

THE DEPUTY PRESIDENT'S DECISION

Her Honour Wells DP accepted Mr Gee's evidence as to the relevant course of events, and found that his dismissal was unfair, having regard to the fact that the investigation conducted by Grange was procedurally flawed, and that Tasports had not made sufficient effort to redeploy him in an alternative position.

Deputy President Wells also found that Tasports had failed to take into consideration all of the matters set out in section 387 of the Fair Work Act 2009 (Cth) (FW Act).

In reaching these conclusions, Wells DP referred to two recent FWC decisions: Pettifer v MODEC Management Services Pty Ltd (Pettifer) and Kool v Adecco Industrial Pty Ltd T/A Adecco (Adecco).⁴ Her Honour did not consider that the decisions were inconsistent with each other, or that they impelled a conclusion that Mr Gee's dismissal was fair.

A brief summary of the Pettifer decision

This case concerned Mr Pettifer, an employee of labour hire company Modec Management Services Pty Ltd (Modec), who had been assigned to work for BHP Billiton Petroleum Inc (BHPB) on a 'floating production, storage and offloading vessel'.

Following a 'near-miss' incident, BHPB directed Modec to remove Mr Pettifer from the vessel on which he had been working. BHPB was entitled to issue this direction by force of a provision in the labour supply contract between it and Modec. Although Modec did not agree that Mr Pettifer's conduct justified his removal from the vessel, they facilitated his removal in accordance with the contract. Modec then endeavoured to find alternative work for Mr Pettifer, but decided to terminate his employment because of its inability to identify a suitable role for him. Mr Pettifer was given an opportunity to respond to this conclusion, but ultimately Modec proceeded with the termination.

A Full Bench of the FWC found that the dismissal was not unfair on the basis that Mr Pettifer's 'capacity' was a factor in determining whether there was a valid reason for termination, and that there were no practical alternative means by which he could have been retained. In reaching this conclusion, the Full Bench distinguished Adecco on its facts, but endorsed the understanding of the relevant principles upon which it was based.

A brief summary of the Adecco decision

Adecco was handed down shortly before Pettifer, and also concerned a labour hire company that was required to remove one of its employees from the host employer's workplace. In Adecco, however, the FWC had not been provided with access to the contract between the labour hire company and its client, so that it was not clear whether the host had the contractual capacity to direct Adecco to remove its employee from its workplace.

Further, Adecco did not make any attempt to find alternative work for the displaced employee. In finding that the applicant had been unfairly dismissed, Asbury DP stated that:

The contractual relationship between a labour hire company and a host employer cannot be used to defeat the rights of a dismissed employee seeking a remedy for unfair dismissal. Labour hire companies cannot use such relationships to abrogate their responsibilities to treat employees fairly. If actions and their consequences for an employee would be found to be unfair if carried out by the labour hire company directly, they do not automatically cease to be unfair because they are carried out by a third party to the employment relationship. If the Commission considers that a dismissal is unfair in all of the circumstances, it can be no defence that the employer was complying with the direction of another entity in effecting the dismissal. To hold otherwise would effectively allow labour hire employers to contract out of legislative provisions dealing with unfair dismissal.⁵

Tasports' Appeal

Tasports sought to appeal Deputy President Wells' decision on a number of grounds, including that:

the Full Bench decision in Pettifer had established that, in cases where an employee is unable to perform work as a result of the actions of a third party, the employer will have a valid reason for dismissal related to the employee's incapacity to perform the inherent requirements of their job; and
it was not the role of the Commission to determine whether the decision of that third party was correct or fair but to consider whether the dismissal was unfair.⁶

The Full Bench granted leave to appeal – although, as we explore below, the appeal was dismissed on its merits.⁷

THE FWC FULL BENCH'S DECISION

Applying the statement of principle in Adecco to the circumstances of Tasports, the Full Bench of the FWC upheld the decision of Wells DP to the effect that Mr Gee had been unfairly dismissed.

In doing so, it decisively rejected Tasports' arguments by finding that the Deputy President had correctly distinguished Mr Gee's case from the facts in Pettifer, on the grounds that Tasports:

did not provide the FWC with a copy of its contract with Grange, and had therefore failed to establish that Grange did in fact have a legal right to require Mr Gee's removal from the site;
did not form its own independent view as to whether Mr Gee had committed misconduct, but instead essentially adopted the outcome of Grange's procedurally flawed investigation; and
failed to adequately investigate options for Mr Gee's redeployment (especially in light of the fact that Tasports operates and employs workers in its own ports).

KEY TAKEAWAYS FOR EMPLOYERS

If a host employer wishes to have an unrestricted right to require the removal of an on-hired employee from workplaces controlled by it, it should ensure that its contract with the relevant labour hire provider expressly invests the host with the capacity to do so.

Even if a host employer has a clear right to require the removal of an on-hired employee, it does not necessarily follow that a subsequent dismissal of the employee by the labour hire provider would be fair. In all instances, the fairness or otherwise of the termination will be determined on the merits, and by reference to the s 387 criteria in the FW Act.

If an employee is dismissed on the basis of their lack of capacity to perform the requirements of their job, the dismissal must be genuine. Further, a labour hire provider must make a bona-fide and far reaching attempt to redeploy the employee to another position, whether within the provider's own organisation, with another client, or with another employer.

Footnotes

¹[1] [2017] FWCFB 1714, [3].

² [2017] FWCFB 1714, [6].

³ Tasports did not in fact discuss the possibilities for alternative work with Mr Gee – [2017] FWCFB 1714. [8].

⁴ [2016] FWCFB 5243; [2016] FWC 925.

⁵ [2016] FWC 925, [49].

⁶ [2017] FWCFB 1714, [16].

⁷ [2017] FWCFB 1714, [25].

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.