A recent decision of the Fair Work Commission (FWC) means that labour hire employees working on projects may find it more difficult to avail themselves of the unfair dismissal protections in the Fair Work Act 2009 (Cth) (Fair Work Act).

In this case, the labour hire employee’s contract of employment made specific reference to the employee undertaking work for a host company on a particular project.  The employee had worked on this project for 7 years, when he was involved in a ‘near miss’ safety incident.  As a result of this incident the host company advised the employer that it was exercising a right under its contract with the employer to remove the labour hire employee from the project site.  After unsuccessfully attempting to find an alternative position for the labour hire employee, the employer terminated the employee’s employment.

The parties’ submissions

The labour hire employee brought an unfair dismissal claim.  Before the FWC, the labour hire employee argued that there was no valid reason for his dismissal as it did not relate to his capacity or conduct and was harsh, unjust or unreasonable in light of his lengthy service and excellent employment record.

The employer conceded that the labour hire employee was not dismissed for reasons of conduct or capacity.  Rather, the employer submitted that the termination occurred as a result of the host company’s decision to enforce its contractual right to exclude the labour hire employee from the project and was a matter beyond the employer’s control. Given that attempts were made to find an alternative position, the employer submitted that the termination was not harsh, unjust or unreasonable in the circumstances.

The Commissioner’s decision

Both parties referred to FWC jurisprudence dealing with dismissal of labour hire employees, including Kool v Adecco Industrial [2016] FWC 925, in which the FWC held that a labour hire employer cannot rely on a host company’s directions and reasons for terminating a labour hire employee without also independently verifying those reasons.  However, in this case, Commissioner McKenna considered that none of the authorities put before her were relevant.  The Commissioner made the following findings in rejecting the labour hire employee’s unfair dismissal application:

  1. the labour hire employee was employed to work on a specific project, which was set out in the contract of employment;
  2. the host company exercised a lawful contractual right to exclude the labour hire employee from the project;
  3. when the host company exercised this right, this was a matter “beyond the [employer’s] control”;
  4. the employer made genuine attempts to find the labour hire employee alternative employment; and
  5. the labour hire employee received payment in lieu of notice.

The labour hire arrangements that applied in this case – where the host company has the unilateral right to exclude the labour hire employee from a project regardless of the views of the labour hire employer – are reflective of many labour hire arrangements operating today.  With this in mind, this decision means that labour hire employees excluded from projects by host companies may find it more difficult to avail themselves of the unfair dismissal protections in the Fair Work Act.

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