The Fair Work Commission (FWC) has recently found that a labour hire employer cannot abrogate its responsibilities to ensure employees are only dismissed for valid reasons after having followed procedurally fair processes. While the case was fact specific and may have been decided differently with the benefit of further evidence from the employer, it serves as an important reminder to employers who place employees at client sites that they continue to bear the ultimate onus for managing their employees and the disciplinary process.

Background

The applicant, Jayleen Kool (Kool), commenced an employment relationship with Adecco Australia Pty Ltd (Adecco) on 18 October 2012. On 22 October 2012, Kool commenced a placement with one of Adecco’s clients, Nestle.

Although Kool was engaged by Adecco on a casual basis, her placement at Nestle involved regular work in excess of 38 hours per week and ultimately continued for a period of nearly two and a half years.

During that period, neither Adecco nor Nestle raised with Kool any concerns regarding her conduct or work performance.

On 16 March 2015, Nestle contacted Adecco and requested that Kool’s engagement at Nestle cease, citing inappropriate or unprofessional conduct on the part of Kool. Based on the very limited evidence filed by Adecco, it appeared that Nestle had met with Kool and had raised concerns about her clocking card for her shift on 2 March 2015. On the basis of those concerns, Adecco informed Kool that her engagement at Nestle had been terminated but Adecco would attempt to find Kool some other employment.

Kool filed an unfair dismissal application against Adecco, alleging that she had been dismissed and that the dismissal was harsh, unjust or unreasonable.

Adecco’s case

Adecco argued that the FWC lacked jurisdiction to hear the application on the grounds that:

  1. Adecco was continuing to seek alternative placements for Kool. As such, Kool’s employment had not been terminated; and, in the alternative
  2. If Kool’s employment had been terminated, the placement at Nestle had ended at the behest of Nestle and therefore any dismissal was not at the initiative of Adecco.

The FWC’s findings

The FWC was critical of the lack of evidence called by Adecco. While Adecco tendered a ‘Candidate Declaration’, which was said to be an acknowledgement by Kool of the terms and conditions of her employment, Adecco did not lead any evidence to establish that Kool had in fact signed, or even been provided with a copy of, that document.

In the absence of evidence, the FWC was satisfied that:

  1. Kool had worked full-time hours during her placement at Nestle;
  2. When her placement at Nestle ended, Adecco did very little to find alternative employment for Kool and did not offer her any further work for a period of several weeks;
  3. The alternative employment Adecco did find for Kool was fundamentally different from the work she had enjoyed at Nestle in that there were significantly fewer hours on offer, and the work was sporadic and uncertain; and
  4. The above factors, in combination, amounted to a dismissal at the initiative of Adecco.

Adecco’s evidence and submissions failed altogether to address the factors set out in s 387 of the Fair Work Act 2009(Cth), which the FWC must take into account in considering whether a dismissal was harsh, unjust or unreasonable.

Based on the evidence available, the FWC found that:

  1. Although Nestle had alleged inappropriate or unprofessional conduct on the part of Kool, Adecco failed to independently verify whether the alleged conduct had in fact occurred. Further, Adecco failed to establish a lack of alternative placements or any unreasonable refusal by Kool of alternative placements. In those circumstances, there was no valid reason for dismissal;
  2. Adecco was aware that Kool’s placement at Nestle was being terminated on the basis of alleged inappropriate or unprofessional conduct but failed to notify Kool of the reasons for dismissal and failed to provide her with an opportunity to respond;
  3. It could not be satisfied that Kool had been warned regarding unsatisfactory performance;
  4. Adecco’s managers had proceeded on the assumption that Kool was a casual employee who could be dismissed at will, failing to appreciate that:
    1. a fundamental change to an employee’s terms and conditions of employment can constitute dismissal;
    2. failure to offer work to a casual employee can constitute dismissal; and
    3. ‘an employer cannot abrogate its responsibilities to afford procedural and substantive fairness to a dismissed employee by relying on the fact that unfair treatment was meted out by another entity in which the employer had placed the employee’.

The FWC acknowledged that labour hire arrangements:

‘…can be a minefield for all concerned…The actions of a host employer – particularly when its managers and supervisors engage in disciplinary action against labour hire employees – can have a direct and fundamental impact on the rights and obligations, as between the labour hire company and its employees.’

Notwithstanding these acknowledged difficulties, the FWC held that:

‘…the contractual relationship between a labour hire company and a host employer cannot be used to defeat the rights of a dismissed employee seeking a remedy for unfair dismissal.’

The FWC found the dismissal was unfair but is yet to determine the question of remedy.

Lessons for employers

The FWC’s decision highlighted the importance of carefully worded contracts and procedures to ensure employees understand and accept their employment conditions. In this case, Adecco was unable to establish that Kool had signed or been provided with a copy of Adecco’s ‘Candidate Declaration’, leading to a finding that this was:

‘…not a case of a labour hire employee who knowingly entered into a contract of employment which made it clear that the role was temporary and could end at any time…’

Further, in circumstances where employers wish to have the power to terminate employment due to a client requesting the employee’s removal:

  1. The employment contract should clearly express the power to terminate in these circumstances;
  2. Employers should not blindly accept a client’s allegations of misconduct or underperformance; and
  3. Employers should ensure that employees are afforded procedural fairness during the disciplinary and dismissal process, including warning the employee of unsatisfactory performance, informing the employee of the reasons for dismissal and providing an opportunity to respond, and allowing the employee to have a support person at discussions relating to dismissal.