Labour hire employers beware!

27 November 2018

The increasingly common use of labour hire agencies by employers to source workers may be under threat following a recent unfair dismissal case that saw a casual labour hire worker reinstated to her assigned role at BHP Billiton Mitsubishi Alliance (BMA), notwithstanding that she was the employee of a labour hire agency contracted to provide services to BMA and not an employee of BMA.

The Federal Court of Australia granted an interlocutory injunction requiring BMA to return Ms Kim Star, as a casual labour hire worker to the position she had held in BMA notwithstanding that she was not the employee of BMA.

This recent decision followed an earlier decision of the Fair Work Commission in Ms Kim Star v WorkPac Pty Ltd T/A WorkPac Group [2018] FWC 5745.

What is Labour Hire?

A labour hire worker is someone who is engaged by a labour hire agency. Labour hire companies enter commercial contracts with businesses to supply their workers for a specific task or tasks usually for a set period of time. This provides employers with highly sought after flexibility.

In this relationship, the labour hire company, as the worker’s employer, is liable for the payment of wages, superannuation, workers’ compensation, payroll and other tax obligations as well as any other employee entitlements. They are also responsible for recruiting workers, performance management and dismissing workers.

The host business is usually responsible for determining the work available and directing the labour hire workers to undertake particular tasks or jobs. As a general rule, a labour hire worker has no contract with the host business, meaning that they cannot make an unfair dismissal claim against the host business if they are removed from the site. There does not, in the majority of labour hire agreements, need to be a specific reason given for the removal of workers from a site.


In this case, Ms Star was employed by Workpac Pty Ltd T/A WorkPac Group (WorkPac) as a casual employee to perform work at the Goonyella Riverside Mine, pursuant to a contract for the supply of labour between WorkPac and BMA, the owner and operator of the mine.

WorkPac is a labour hire business that provides labour to its clients in various industries, including the mining industry. Ms Star’s original assignment to BMA commenced on 22 October 2013 and was for a period of six months; however, her contract stipulated that “this may vary and is a guide only“.

On 13 November 2017, Ms Star received a telephone call from WorkPac informing her that BMA had demobilised her from the mine. Ms Star was not given a reason for her removal from BMA, except being told that it was not performance related. WorkPac informed Ms Star that she would receive a termination letter via email.

Ms Star was not assigned to an alternative role following her demobilisation from the mine and was of the understanding that her employment had been terminated.

Ms Kim Star v WorkPac Lt T/A WorkPac Group [2018] FWC 4991 (First Decision)

The First Decision in Ms Star’s unfair dismissal application was delivered by Deputy President Asbury on 28 August 2018.

The Commission found that Ms Star’s employment had been terminated when WorkPac complied with BMA’s direction to remove her from its site. The Commission held that WorkPac did not have a valid reason for the dismissal. On the balance of probabilities, the Commission found that the reason for the direction to remove Ms Star from the mine was related to her conduct.

Further, the Commission held that WorkPac had failed to consider alternative assignments before terminating her employment. As a result, the Commission held that the dismissal was unfair.

Ms Kim Star v WorkPac Pty Ltd T/A WorkPac Group [2018] FWC 5745 (Second Decision)

The Second Decision in Ms Star’s unfair dismissal application was delivered by Deputy President Asbury on 17 September 2018.

The Commission ordered WorkPac to reinstate Ms Star to her former position at BMA, maintain the continuity of her service and pay her an amount of $4,475.00 for lost remuneration.

BMA took the position that it would not reinstate the worker to its site.

Construction, Forestry, Maritime, Mining and Energy Union v BM Alliance Coal Operations Pty Ltd [2018] FCA 1590

As a result, the Construction, Forestry, Maritime, Mining and Energy Union (the Union) sought interlocutory relief against BMA, restraining BMA from excluding or otherwise preventing Ms Star from attending the mine to perform work there on behalf of WorkPac.

The Federal Court granted the Union’s interlocutory application, requiring BMA to allow her to return to her previous position.

The case was based on an alleged contraventions by BMA of the general protection provisions of the Fair Work Act 2009 (Cth) (FW Act), namely that it demobilised Ms Star because she had exercised a “workplace right”.

The Union alleged that Ms Star had raised safety related issues immediately before being demobilised.

BMA did not give evidence as to its reasons for demobilising Ms Star. As such, the Court decided to grant the injunction.

Implications for Employers

This case has a number of serious implications for labour hire agencies and more particularly host businesses and its consequences are of general application.

Following the Commission’s decision, labour hire agencies have been put on notice that they cannot simply ignore the unfair dismissal provisions of the FW Act and adopt a “because the client said so” approach when dealing with employees that have been assigned to a client’s business but are directed to leave that business by the agency’s client. Importantly, the contractual relationship between a labour hire agency and a host employer cannot be used to defeat rights of a dismissed employee seeking a remedy for an unfair dismissal.

Further, this case has implications for host businesses, which now need to be aware that they may be restricted in removing casual or temporary labour hire workers from their workplace.

Host businesses should ensure that they review their policies regarding the removal of labour hire workers and in particular, ensure that there is evidence of lawful reasons for any decision to remove such a worker from a site.

This article was written by Brad Swebeck, Partner and Tayla Gee, Graduate.

Brad Swebeck

P: +61 2 9334 8781


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