Labour hire employees still entitled to claim unfair dismissal remedy

Background

Ms Kool was engaged as a casual employee by Adecco Australia Pty Ltd (Adecco) to undertake work at the host employer, Nestle Chalet Patisserie (Nestle). Ms Kool undertook work at Nestle for a period of 2 years and 5 months, working at least 38 hours per week.

Prior to commencing her placement at Nestle, Ms Kool signed a Candidate Declaration provided to her by Adecco  in which she acknowledged, amongst other things that:

• she would be under Adecco's client's care, direction and supervision during the period of any assignment;
• she was engaged as a casual by Adecco; and
• Adecco did not control the length of any client assignment and the client may vary or conclude the assignment at an hours' notice.

In March 2015, Nestle advised Adecco it was meeting with Ms Kool regarding "inappropriate/unprofessional conduct" - in particular that she was 'clocking' other employees in and out of their shifts and gossiping. Further this was not the first time it had spoken to Ms Kool regarding such conduct.

Under instruction from Nestle, Ms Kool was subsequently advised by Adecco that her assignment with Nestle was terminated with immediate effect.

After the termination of Ms Kool's placement at Nestle, Adecco asserted that Ms Kool was offered and accepted further assignments with other Adecco clients - however, there was no evidence to support this assertion with the exception of two placements totalling 3 days work which occurred at Ms Kool's initiative after she contacted Adecco.

Ms Kool commenced proceedings against Adecco alleging that she had been unfairly dismissed.

Finding

In making its findings, the Fair Work Commission observed that labour hire arrangements have been developed to address a number of situations from short term labour needs to work over a more lengthy period with the labour hire employee's integration into the host employer's workforce.

Further where such arrangements exist, that arrangement cannot be used as shield by the labour hire provider against unfair dismissal claims. In particular, the Fair Work Commission found noted:

"… 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 because they are 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."

The Fair Work Commission found Ms Kool had been terminated at Adecco's initiative as:

• there was no contractual or other evidence to demonstrate Ms Kool's employment with Adecco would cease upon the termination of her placement with Nestle;
• Ms Kool's employment was ended by Adecco at the behest of Nestle due to Nestle's decision that she had engaged in misconduct;
• Adecco advised Ms Kool there was no work available at Nestle despite advertising for another labour hire worker at the Nestle site within a week of Ms Kool's removal; and
• Adecco did little, if anything, to place Ms Kool in another position after the termination of her placement at Nestle.

If was further determined that:

• there was no valid reason for the termination of Ms Kool as Adecco acquiesced to Nestle's decision and removed her from Nestle's site without seeking any independent verification that Ms Kool had in fact engaged in misconduct;
• Adecco failed to notify Ms Kool of the reason for her termination of her employment despite knowing that Nestle had concluded the assignment due to its view that Ms Kool had engaged in misconduct;
• there was insufficient evidence to adduce if Ms Kool was given an opportunity to respond to the allegations but in any event, Adecco cannot abrogate its responsibility to notify Ms Kool of the reason for termination related to Ms Kool's capacity or conduct, for her removal from a long term and steady placement and to give her an opportunity to respond to that reason; and
• there was no evidence that Ms Kool had been warned about the clocking on and off, and that this was unsatisfactory performance.

The Fair Work Commission found Ms Kool's dismissal unfair and had deferred the determination in relation to remedy to a later date.

Lessons

The decision confirms the need for labour hire providers to use caution in terminating or failing to place labour hire workers in alternative positions as failing to do so may place them at risk of a claim for unfair dismissal remedy from their labour hire employees.

Labour hire providers should ensure they:

• provide employment contracts which clearly characterize and clarify the nature of the employee's employment relationship with them;
• ensure that terminations of a labour hire employees' placements with host employers due to misconduct or other allegations is undertaken appropriately, in a fair manner with due process;
• ensure that they work closely with the host employer including ensuring the management and control of disciplinary matters regarding their labour hire employees; and
• consider and take steps to find alternative options for the placement of labour hire employees, including seeking professional advice on the best way forward in managing these matters.  

If you would like to know more about this case or managing labour hire employees generally, please contact National Workplace Lawyers on  +61 2 9233 3989.

National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.