The recent decision of the NSW Court of Appeal in Jurox Pty Ltd v Fullick [2016] NSWCA 180 reiterates that while a labour hire company owes a non-delegable duty to its employees, its duty did not extend to ensuring that the host employer adequately supervised its workers and that the safe system of work was adhered to.

Integrated Pty Ltd (Integrated/labour hire company) assigned Ms Fullick (the plaintiff/worker), pursuant to a labour hire agreement, to work as a production operator at a factory premises occupied by Jurox (host employer/defendant) that manufactured veterinary pharmaceutical products. The worker claimed that she was directed to empty 25 kg bags of sugar substance called dextrose into a hopper and was injured in the course of performing this task. She sued the host employer only and the host employer pleaded a reduction pursuant to s151Z(2) of the Workers Compensation Act 1987 (NSW) (WCA) against Integrated.

District Court

At first instance, the matter was heard before Judge Mahoney, who found that there was a safe system of work as it did not require the worker to lift the 25 kg bags. The worker was provided with instructions to allow the dextrose flow from the bag into the hopper by force of gravity and she was injured as she did not comply with these instructions.

However, whilst accepting that the host employer had in place a safe system of work, the Court found that it breached its duty of care in failing to adequately supervise the worker and ensuring that she was compliant with the instructions provided. The Court found that the host employer would have detected the worker’s failure to follow instructions if proper supervision was provided, and causation was established pursuant to s5D of the Civil Liability Act 2002 (NSW) (CLA).

Judge Mahoney noted that Integrated had undertaken audits of the work environment but did not extend to the room that the worker worked in. In any case, it was found that any audit would have revealed the safe system of work in place, but would not have revealed that the system was not followed. The failure to audit the safe system of work was a breach of duty of care on the part of Integrated, however, the breach did not cause the worker’s injury. Accordingly, while Integrated owed the worker a non delegable duty of care as her employer, no reduction was made pursuant to s151Z(2) of the WCA.

The worker was awarded $588,515 in damages.

Court of Appeal

The host employer appealed the trial judge’s finding in relation to its system of supervision and his failure to address the claim for contributory negligence.

In dismissing the appeal, the Court of Appeal upheld the findings by the trial judge that the system of work in place for emptying the dextrose into the hopper was safe. Rather, the worker did not perform the task as per her training and instructions and that “she adopted an unsafe work practice, and that work practice continued, uncorrected, until the day of her injury”.

In affirming the trial judge’s findings that the supervision by the host employer was inadequate, the majority held that “even a modicum of supervision would have exposed the incorrect method that the respondent was using”. The majority further concluded that no reduction should be applied on the account of contributory negligence on the part of the worker, as her incorrect technique “went unobserved and unremarked” which resulted from “the entrenchment of a practice that ought to have been, and could easily have been, corrected at an early stage”.

The majority also upheld the trial judge’s findings that the claim against Integrated failed as causation was not established. It was found that Integrated could not be held responsible for failing to ensure that the host employer did not supervise its own safe system of work, which would not have been picked up by any audit performed by Integrated.

Conclusion

The case reiterates that:

  • A labour hire company owes a non-delegable duty to its employees and has a duty of care to ensure that a safe system of work has been devised and implemented by the host employer. However, its duty did not extend to ensuring that the host employer adequately supervised the safe system of work.
  • A host employer’s obligation extends not only to provide a safe system of work, but to ensure that the system is implemented by the workers through proper supervision. Its use of labour hire involves a heavy burden, similar to that of an employer.
  • Contributory negligence on the part of the worker may not be established if the unsafe practice at work could have been discovered if proper supervision was provided by the host employer.