Labour Hire Company Liable for Negligent Actions of Labour Hire Employee at Client Site

Labour hire companies will generally be liable for the negligent actions of their employees unless they can show that total control of the employee was transferred to the host company during the engagement.

In the recent case of Paskins v Hail Creek Coal Pty Ltd & Anor [2017] QSC 190, the labour hire employer, Workpac Pty Ltd (Labour Hire Employer) was found vicariously liable for the negligent actions of one of its labour hire employees engaged as an experienced excavator operator at a mine site operated by Hail Creek Coal Pty Ltd (Host Employer).

In August 2013, the employee positioned an excavator bucket in the path of an oncoming haul truck, resulting in a collision. The driver of the truck sustained a back injury and sued the Host Employer for breaching its duty to implement a safe system of work, as well as the Labour Hire Employer for its employee's negligence.

The court found the Host Employer had breached its non-delegable duty to take precautions against foreseeable and significant risk of injury to the worker in the workplace but rejected the Labour Hire Employer's claim that the Host Employer was also liable for the employee's negligent actions.

Justice McMeekin found the Labour Hire Employer had failed to transfer "entire and absolute control" of its employee to the mine operator and, therefore, "should be held to the usual incidents of employment and that includes liability to injured third parties for the casual acts of negligence of its employees".

In reaching its conclusion, the court considered that the terms of the labour hire contract with the Host Employer allowed the Labour Hire Employer to have an office on site and an ongoing presence in order to exercise significant control over its employees. As such, the labour hire employee only subjected himself to the control of the Host Employer to the extent that his employment with the Labour Hire Employer allowed him to.

The Labour Hire Employer was in any event also contractually obliged to indemnify the Host Employer for the liability incurred in respect of the worker's claim.

Justice McMeekin made a judgment for the worker against the Host Employer of AU$709,408 and against the Labour Hire employer of AU$966,991.

This case highlights that the absence of control is crucial in discharging a labour hire company's liability in respect of a labour hire employee's actions. That is, for a labour hire company to avoid liability, labour hire arrangements should ensure that complete, or substantially complete, control of an employee is transferred to the host company, so that the host company not only directs the employee as to what services to perform but also how to perform them. In this case, whilst the Host Employer was able to tell the employee what work to perform, the Labour Hire Employer retained ultimate control for directing him how to perform the work.