Labour-hire was employer — technical points rejected

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Labour-hire was employer — technical points rejected

A Full Bench of the Fair Work Commission has rejected a labour-hire company’s arguments that the principal business was the true employer of the relevant workers; and, in doing so, technical legal arguments about the nature of the employment relationship were not accepted.

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A Full Bench of the Fair Work Commission has rejected a labour-hire company’s arguments that the principal business was the true employer of the relevant workers; and, in doing so, technical legal arguments about the nature of the employment relationship were not accepted.

Background to appeal

The labour-hire company submitted that the doctrine of joint employment doctrine was relevant.

Tooheys (principal) had at all relevant times operated a major brewery at Lidcombe in Sydney. Until 1991, all electrical trades work at the brewery was conducted internally by persons who were indisputably employees of Tooheys. Tooheys became dissatisfied with union-endorsed work practices and the level of productivity at the brewery, and sought significant change.

Tooheys advanced a proposal to Mr Trevor Gorman, an existing electrical tradesperson employed by Tooheys and the workplace delegate for the Electrical Trades Union, that he should establish a new company that would provide Tooheys with its required electrical services and labour in a more flexible and efficient way. Arising out of this, a new company, Feyman Pty Ltd was established.

When this labour-hire company lost the contract with Tooheys in 2011, the employees involved brought unfair dismissal applications against Tooheys — arguing that Tooheys was the actual employer or at least the joint employer.

Deputy President Sams dismissed the unfair dismissal applications and this Full Bench matter was heard to decide the actual employer.

Law did not support labour-hire’s argument

The Full Bench was unwilling to change or expand the legal concepts relevant to the employment relationship and noted that the Fair Work Commission has no role in developing the common law of employment because this was a matter for the courts.

The concept of joint employment involving labour-hire arrangements was noted as a ‘considerable development’ and the Full Bench declined to act in this regard:
‘The cases in which Australian courts have analysed labour hire arrangements have invariably involved the identification of which one of two putative employers is in fact the employer.

In no case has an Australian court approached the analysis on the basis that the exercise of control over the worker by the hirer of labour in a labour hire arrangement may render the hirer, together with the labour hire company, a joint employer of the worker …

The current state of consideration concerning the concept of joint employment in Australian law was stated by the Federal Court (Collier J) in Fair Work Ombudsman v Eastern Colour Pty Ltd [2011] FCA 803 …’
Labour hire and control

The Full Bench analysed the current law in detail and noted that when labour-hire workers were involved the principal is often involved in the ‘control’ of the workers:
‘From a practical point of view, it is necessarily a fundamental feature of any labour hire arrangement that the hirer of the labour is able to exercise a large degree of management control over the performance of the work of the hired workers and is also able to integrate them to a significant degree into its existing work systems …

Without this, the arrangement would become unworkable. In our experience, labour hire arrangements almost invariably involve the hirer being able to communicate directly to the hired worker instructions concerning the performance of work without the interposition of the labour hire company. That, without more, cannot operate to render the hirer the employer of the hired worker …

… in any event, it must be the case as the Deputy President pointed out that for Tooheys to have been a joint employer of the applicants, there must still have been express or implied contracts of employment between Tooheys and the applicants. For the reasons already stated, there were no such contracts.’
FP Group was refused permission to appeal.
 
Message: Unless there are clear contractual arrangments indicating otherwise, the workers supplied by a labour-hire company remain the employees of that labour-hire company.
 
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