When Must an Employer Terminate Labour Hire Arrangements for Redundant Employees?

In Brown & Ors v Clermont Coal Operations Pty Ltd T/A Clermont Open Cut [2015] FWC 3862, the Fair Work Commission held that employers were not obliged to terminate labour hire employees to redeploy redundant employees where the labour hire arrangements are in place as part of a legitimate business strategy.

Factual Background. Six former employees ("Applicants") of Clermont Coal Operations Pty Ltd ("Respondent") claimed that the Respondent had failed to consider redeployment (under s 389(2) of the Fair Work Act 2009(Cth)) to the Clermont mine or other mines run by the Respondent's parent company, particularly those which had a large labour hire workforce. As a result, the Applicants claimed that their dismissal was not a case of genuine redundancy.

Legal Background. Section 385 of the Fair Work Act 2009 (Cth) states that an employee may have access to the unfair dismissal regime if their dismissal was not a case of genuine redundancy. A redundancy is genuine where the employer no longer requires the job to be performed by anyone and the employer has considered redeployment within the employer's enterprise or an associated enterprise. The question whether an employer must offer redundant employees jobs being performed by existing labour hire employees to avoid unfair dismissal claims has been raised on a number of occasions in the Fair Work Commission, and it has led to conflicting views.

Decision. In this case, the Commission considered that operations of a mine involved "symbiotic processes" such that if one unit is unable to complete a task, it would result in major operational difficulties. Accordingly, it would not be reasonable to require an employer to reduce numbers of existing labour hire employees to free up positions so that redundant employees could be redeployed, where the labour hire employees gave the mine the flexibility to cover employees on leave to avoid bringing operations to a standstill. The labour hire employees were found to be part of a "legitimate industrial strategy".

Lessons for Employers. Employers employing labour hire employees pursuant to a legitimate staffing rationale should not be concerned with unfair dismissal claims in circumstances that would otherwise be genuine redundancies. However employers should monitor developments in the area as the Vice President left it open for limited circumstances where it might be appropriate for the Commission to consider work undertaken by contractors for employers or associated entities for the purposes of s 389(2).

Federal Circuit Court Overturns Ban on Using Annual Leave to Attend Union Demonstration

The Federal Circuit Court has recently considered a workplace ban on employees accessing their accrued annual leave to participate in a union demonstration. The Court overturned the ban, after deciding that it was in violation of the general protections contained in the Fair Work Act 2009(Cth) ("Act"), including employees' rights to access leave entitlements and to participate in industrial action.

Factual Background. Various unions, including the Electrical Trades Union of Australia ("ETU") had organised an Australia-wide demonstration to be held on 17 August 2015 to protest against the China–Australia free trade agreement. An email dated 7 August 2015, leaked from management, revealed that the employer planned on preventing the employees on Curtis Island from accessing annual leave on 17 August 2015 in order to attend the demonstration. The email stated that leave requests for that day were to be denied and that the employer does not "sanction or authorise any such activity", referring to the union demonstration planned for 17 August 2015. It also stated that any leave requests which had already been approved for that day were to be reversed.

Legal Background. The ETU argued that the proposed ban was a violation of the general protection provisions contained in the Act, claiming that the employer had taken adverse action against its employees for exercising their rights to access entitlements and to participate in industrial action.

Decision. The Court accepted the ETU's argument and overturned the employer's proposed ban on the basis that it was in breach of the general protection provisions contained in the Act.

As a result, the employer agreed to enter into undertakings with the unions to permit "non-essential" employees to take annual leave on the day of the demonstration. The employer also agreed not to prevent employees from attending the demonstration and not to reject annual leave requests on that basis, and to instead approve requests in accordance with normal company processes. In relation to the 17 August 2015 demonstration, this meant that the employer agreed to approve all requests for annual leave that had been submitted within a reasonable time, provided that the relevant employee had the leave available and subject to the employer's reasonable operational requirements.

Lessons for Employers. While industrial action can be disruptive to the workplace, employers should ensure that they are always upholding the general protections afforded to employees in the Act. In relation to industrial action, employers cannot ban access to annual leave and should instead adopt their usual processes when considering requests for leave to attend industrial action.

High Court Clarifies that Injured Workers Can Bring Civil Claims Following FWO Prosecutions

In Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28, Justices Bell, Gageler, Keane, Nettle and Chief Justice French unanimously allowed an employee's appeal from a decision of the Court of Appeal of the Supreme Court of New South Wales finding that the employee was prevented (or "estopped") from bringing a civil claim seeking damages for injuries sustained in the workplace following a successful prosecution of the employer by the Fair Work Ombudsman (relating to wage underpayments).

Factual Background. Mr Tomlinson worked at an abattoir operated by Ramsey through a labour hire company called Tempus from 2005 to November 2008. In October 2008, Mr Tomlinson was informed that his services were no longer required and that his employment was to terminate by reason of the redundancy of his position. At the time, Mr Tomlinson made a complaint to the Fair Work Ombudsman relating to entitlements which Mr Tomlinson considered were owing to him on termination of his employment. The Fair Work Ombudsman commenced proceedings against Ramsey alleging contraventions of the relevant Award associated with the termination of Mr Tomlinson's employment (and his colleagues).

Legal Background. The Fair Work Ombudsman's claim could only be established against Ramsey if it could be demonstrated that Ramsey was Mr Tomlinson's true employer (rather than the labour hire company). The Ombudsman was successful in the Federal Court in establishing this, and orders were made for Ramsey to pay penalties for its breaches of the applicable Award.

Mr Tomlinson subsequently brought a claim in the NSW District Court against Ramsey alleging that he had suffered an injury whilst working at Ramsey's abattoir in June 2008. NSW legislation would prevent Mr Tomlinson from bringing such a personal injury claim against Ramsey if Ramsey were Mr Tomlinson's employer (as claims for injuries made at an employee's workplace are to be managed pursuant to the workers' compensation regime). In the District Court proceedings, Mr Tomlinson argued that Tempus was his employer and that Ramsey owed a duty of care to Mr Tomlinson as he was a labour hire worker working at its site. Ramsey argued that Mr Tomlinson was estopped from asserting the District Court proceedings that Tempus was his employer (so that he could pursue a claim against Ramsey for damages associated with personal injury) by reason of the fact that in the Federal Court proceedings, it was asserted (and determined) that Ramsey was his employer (allowing the Court to find them liable for the underpayment of wages).

Decision. At first instance, the District Court found that Tempus was Mr Tomlinson's employer (and held that Ramsey was liable for damages sustained in association with Mr Tomlinson's injury). Ramsey appealed this decision to the Court of Appeal which found that Mr Tomlinson was estopped from arguing that Tempus was his employer (by reason of the previous Federal Court proceedings which found Ramsey to be his employer).

The High Court unanimously upheld Mr Tomlinson's appeal and determined that Mr Tomlinson was not estopped by the Federal Court proceedings from asserting Tempus was his employer because he was not a party to the Federal Court proceedings, they were pursued by the Fair Work Ombudsman (and the Ombudsman could have pursued those proceedings with or without Mr Tomlinson's assistance).

The High Court reverted the matter to the NSW Court of Appeal to determine who Mr Tomlinson's employer was (and consequently, whether Mr Tomlinson's District Court claim should be upheld).

Lessons for Employers. Recently the Fair Work Ombudsman has reached settlements with a number of employers in relation to significant pieces of litigation commenced by the Ombudsman against those employers. If major employers are approached or prosecuted by the Ombudsman, when negotiating settlements with the Ombudsman (and defending prosecutions commenced by the Ombudsman), employers should be mindful that civil claims from individual employees (or groups of affected employees) may follow the resolution of proceedings with the Ombudsman.