Labour hire and unfair dismissal

Employers including labour hire organizations cannot avoid their obligations to treat employees merely because a client has refused to have the employee on site, particularly where redeployment is a reasonable option.


“Other relevant matters

[115] In DA v Baptists Care SA [2020] FWCFB 6046, a Full Bench of the Commission explained what an employer’s obligation are where for reasons of the actions of a third party an employee no longer has the capacity to meet the inherent requirements of their job,

[27] Before we deal specifically with DA’s grounds of appeal, two general conclusions may be stated about DA’s case, the decision and DA’s appeal.

[28] The first is that we agree with the Deputy President that the situation that led to DA’s dismissal is not novel, and reflects circumstances sometimes found in other unfair dismissal cases. The concept of “capacity” in s 387(a) as a basis for a valid reason for dismissal goes beyond the physical or skill capacity of the employee and encompasses situations where employees do not have or maintain the necessary licence, certification, qualification, approval or accreditation to lawfully perform the inherent requirements of their job. 2 Where an employee cannot perform the inherent requirements of their job and there is no reasonable scope for the employee to be redeployed into another role, it is likely that there will be a valid reason for dismissal based on the employee’s capacity.3


[32] Second, in a situation where an employee’s capacity to perform the inherent requirements of their job is affected by the actions of a third party, the employer still has an obligation to treat the employee fairly. The principle in this respect was stated by Deputy President Asbury in Stevens v ISS Property Services Pty Ltd, 4  in the context of a situation where the work capacity of an employee of a labour hire business is affected by the actions of the host employer, as follows:

“[12] A number of cases have considered the manner in which the matters in s. 387 of the Act are considered in circumstances where an employer provides labour to a client and the client directs the employer to remove the employee from a site. As a Full Bench of the Commission observed … in Donald Pettifer v MODEC Management Services Pty Ltd (Pettifer) labour hire arrangements in which a host employer has the right to exclude a labour hire employee from its workplace, are becoming a common part of the employment landscape in Australia. The reality for companies in the business of supplying labour is that they frequently have little if any control over the workplaces at which their employees are placed and the rights of such companies in circumstances where a client seeks the removal of an employee are limited. However, this is not a basis upon which companies in the business of supplying labour to clients can abrogate responsibility for treating employees fairly when dismissal is the result of removal from a particular site and the fairness of the dismissal is considered with reference to the matters in s. 387 of the Act.”

[33] The above is founded upon a similar formulation of the principle stated in Deputy President Asbury’s decision in Kool v Adecco Industrial Pty Ltd, 5  which was expressly approved by Full Benches in Pettifer v MODEC Management Services Pty Ltd6 and Tasmanian Ports Corporation Pty Ltd t/a Tasports v Gee.7 Considerations which may arise in an assessment of whether the employer has acted fairly towards the employee in the type of situation described may include the extent to which the employer has the power to alter, modify or challenge the outcome determined by the third party, the extent to which the employer has exercised that power, and the capacity of the employer to redeploy the employee to a position where the employee’s capacity is not affected by the third party’s conduct. In Pettifer, the dismissal was found not to be unfair in circumstances where it was demonstrated that the labour hire employer was bound by its contract with the host employer to remove an employee from the worksite where instructed to do so by the host employer, and where the employer actively explored opportunities for redeployment but was unable to identify any suitable alternative position.8 By contrast, in Tasports, the dismissal was found to be unfair in circumstances where the employer did not place its contract with the host employer into evidence and thus did not demonstrate that it had no recourse to preserve the employee’s employment at the host employer’s worksite, nor did it adequately investigate options for the employee’s redeployment.9”

[116] The evidence is that it was possible to redeploy the applicant into the workshop. I also accept he had been told that this would occur if he decided not to be vaccinated. I accept he raised this commitment given by his manager with the respondent in the lead up to his dismissal, but they did not engage with him about this at all.

[117] The respondent had created the expectation that the applicant could choose not to be vaccinated and he would then be redeployed to the workshop in Wangaratta and not have to attend site in Port Hedland. There is nothing before the Commission that explains why this previously given commitment was not honoured or that indicates some change circumstances meant it was no longer possible.

[118] It is entirely speculative why the respondent did not do what it said it would do and redeploy the applicant to the workshop. The applicant believes this was the consequence of him refusing to follow directions to take unethical actions. The Commission is not able to assess whether his belief about this is correct or not

[119] What the evidence does demonstrate is that the applicant could have been redeployed into the workshop but was not. Instead for reasons unknown the respondent opted to dismiss him.

[120] In all the circumstances of this matter the respondent’s dismissal of the applicant was unreasonable. The applicant was unfairly dismissed.”

Passages from the decision Archer v Australian Ceramics Engineering Pty Ltd (2022) FWC 3029 delivered 18 November 2022 per Williams C