Unfair dismissal and labour hire arrangements

Here is a passage from a recent unfair dismissal case which expresses the legal principles often in play when the Fair Work Commission deals with an unfair dismissal case which arises when a labour hire employer terminates the employment of an employee because it is instructed to do so by its client, the host employer, or the host employer advises the true employer it does not want the employee back at work.

“Principles associated with labour hire arrangements

The Full Bench has held that in matters involving a labour hire arrangement in which an employee is removed from a worksite on the instruction of the host employer resolution of whether there is a valid reason for dismissal will depend upon the circumstances of the case. 68 A relevant issue will include the terms of the contract between the host employer and the labour hire employer, but only if those terms are disclosed to the Commission. Relatedly, there is no presumption to be made that a contractual obligation to remove an employee from a worksite if instructed to do so69 is a universal term.70 The simple acquiescence of a labour hire employer to such an instruction and the resultant dismissal of an employee may mean it being “difficult to imagine that such a dismissal could be justified on the basis of the worker’s incapacity, since the inability of the worker to continue working for the host employer would be the result of the labour hire employer’s failure to insist upon compliance with its contract with the host employer rather than any incapacity on the part of the worker.”71 The Commission will take account of a failure by a labour hire employer to form an independent view about whether the employee has engaged in misconduct if that is alleged.72”

Johnson v Chelgrave Contracting Australia Pty Ltd (2020) FWC 5784 delivered 4 November 2020 per- Wilson C