Labour Hire Employee dodges the short end of the candy stick

Labour hire companies operate to connect potential employees to businesses of a particular industry that matches their skillset and attributes. Suitability is attained when the attributes of an employee overlap with the operational needs of the business, known as the host employer.

However, the nature of the relationship between employee and labour hire company, in the presence of the third party host employer, can pose legal concerns and implications for the parties involved.

Recently this situation arose in a case before the Fair Work Commission. Labour hire company Adecco Industries found itself liable for the unfair dismissal of an employee who was dismissed by Nestle, the host employer. It is not in dispute that this employee was treated unfairly; she was not offered the rights that the Fair Work Act (1999) affords an employee faced with the prospect of termination.

Despite Adecco’s assertion that the employee remained contracted by Adecco and was merely removed from Nestle, the Fair Work Commission determined that the labour hire relationship cannot be use to abrogate the responsibility to ensure fair treatment of employees.

It was deemed that if the dismissal of an employee would be considered unfair if executed by the Labour Hire company directly, then such a dismissal does not cease to be unfair if executed by a third party to the employment relationship. If such a determination were not reached, it would be effectively permissible for labour hire companies to contract out of the legislative provisions regarding unfair dismissals.

Despite the involvement of host company Nestle, the Fair Work Commission requires that Adecco remedy the employee for the unfair dismissal.

Whilst the employee ultimately enjoys compensation candy, it seems that Adecco must endure the cane. 

To discover the best way to insure and protect your business against such penalties when terminating an employee, speak to one of Nevett Ford’s workplace relations team members on (03) 9614 7111.

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Redundant one day and offered alternate employment the next equals no redundancy pay

DRW Investments Pty Ltd v Richards [2016] FWC 461 is a decision in which a large transport company having lost a major hauling contract found work for affected drivers with the new contractor.


The affected drivers argued that they had been made redundant by their old employer entitling them to redundancy payments but the old employer disagreed.


Commissioner Sams found that the drivers had resigned from their old employer to take up work with the new employer. As a result their employment had not been terminated at the initiative of the old employer so as to bring into operation section 119 of the Fair Work Act.


Commissioner Sams also commented that redundancy pay was for a specific beneficial purpose and not meant as a windfall where employees, whilst being made redundant one day are offered and accept suitable alternative employment the next day.

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Workers are Employees not Contractors

Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd and others [2015] HCA 45 demonstrates that on arrangement where an enterprise engaged the services of cleaners through a labour hire company and represented to the cleaners that they were contractors not employees, is contrary to section 357 of the Fair Work Act 2009 as sham contracting.

Previously, sham contracting was thought to apply only to misrepresentations the employer made to the worker and not to extend to misrepresentations by a third party, which uses the workers’ services, to the workers status as employee.

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