A labour hire company cannot rely on the actions of a host employer exercising its contractual right to remove a labour hire employee from its worksite, as the sole basis for dismissing the employee. Otherwise, this would allow labour hire employers to contract out of the unfair dismissal protections under the Fair Work Act 2009 (Cth). This was illustrated in the case of Tasmanian Ports Corporation Pty Ltd t/as Tasports v Mr Warwick Gee  FWCFB 1714.
Tasmanian Ports Corporation Pty Ltd (TasPorts) owns and operates a number of ports in Tasmania and also supplies labour to privately owned ports. Grange Resources Limited (Grange Resources) entered into a contract with TasPorts for the supply of personnel for its loading and shipping work at Port Latta (Contract). Mr Warwick Gee was employed by TasPorts to work at Port Latta pursuant to the Contract in 2009.
Unbeknownst to Mr Gee, Grange Resources conducted an investigation into an incident relating to his conduct on 13 August 2015 along with other matters. A few days later, Grange Resources advised TasPorts that it would be revoking Mr Gee’s access to all Grange Resources sites effective immediately, alleging that he had engaged in conduct including failing to follow a reasonable work and deployment directive and taking and posting to social media unauthorised photos of Grange Resources assets and work sites. Mr Gee was advised later that day but no attempt was made to obtain his response to any of the matters. TasPorts also advised Grange Resources that it supported its decision to remove Mr Gee and apologised for any issues his conduct caused.
Mr Gee was dismissed by TasPorts on 28 August 2015, with the termination letter stating that “[b]ased on the information provided by Grange Resources, TasPorts [considered] that the decision by Grange Resources to revoke [Mr Gee’s] access was a decision reasonably open to Grange Resources in the circumstances”. The letter then went on to state that since his position involved carrying out work exclusively on Grange Resources’ sites and his access had been revoked, he was unable to perform the inherent requirements of his position and there were no alternative available positions or duties he could perform at TasPorts. TasPorts did not consult with Mr Gee about redeployment opportunities prior to sending the termination letter.
Mr Gee made an application for an unfair dismissal remedy to the Fair Work Commission (FWC) and at first instance, Deputy President Wells accepted Mr Gee’s evidence about the matters alleged against him by Grange Resources and found that there was no valid reason for the dismissal related to his capacity or conduct. TasPorts subsequently appealed the decision of DP Wells arguing that as Mr Gee’s substantive position required him to perform work at Grange Resources’ Port Latta site which Grange Resources owned and had exclusive control over, TasPorts had a valid reason to dismiss Mr Gee in circumstances where TasPorts had exercised its right under its labour hire arrangement with TasPorts not to utilise Mr Gee’s services.
Full Bench decision
The Full Bench did not agree with TasPorts, saying that its approach was inconsistent with the principle espoused in Kool  v Adecco Industrial Pty Ltd  FWC 925 (Adecco) which was endorsed by the Full Bench in Donald Pettifer v MODEC Management Services Pty Ltd  FWCFB 524 . That principle was that whether there is a valid reason for dismissal will depend upon all the circumstances of the case and it is “no defence that a [labour hire employer] was complying with the direction of [the host employer] in effecting the dismissal.”
The Full Bench found that TasPorts did not have a valid reason to dismiss Mr Gee relating to his capacity merely because Grange Resources removed him from the worksite. In coming to this conclusion, the Full Bench noted that:
- TasPorts did not provide the FWC with a copy of the contract between it and Grange Resources. Therefore it could not establish that Grange Resources had a legal right to require Mr Gee’s removal from the worksite or that TasPorts had no opportunity to maintain Mr Gee’s employment at that site
- TasPorts failed to conduct its own investigation into the alleged misconduct and therefore essentially adopted the outcome of Grange Resources’ “procedurally unfair investigation”, rather than forming its own conclusion. Therefore, the determination for the FWC became whether TasPorts had a valid reason to dismiss Mr Gee based on his conduct, rather than based on his capacity
- TasPorts failed to adequately investigate options for Mr Gee’s redeployment, especially because TasPorts runs ports and other businesses in its own right and employs persons for that purpose.
Accordingly, the Full Bench rejected TasPorts’ appeal.
Lessons for employers
The Full Bench has now made it clear that a labour hire company cannot rely on its contractual relationship with a host employer to contract out of the unfair dismissal protections in the Fair Work Act 2009 (Cth), as it will come down to the circumstances of each individual case. Before a labour hire company dismisses an employee that the client no longer wants, the labour hire company should:
- ensure that the contract between the labour hire company and host employer permits the host employer to remove the employee from the worksite
- review the employee’s contract of employment to determine what they are actually employed to do
- determine if the employee is engaged on a casual basis (which is the case for many labour hire employees). This is because casual employees are not eligible to make an unfair dismissal claim, unless it can be established that they are long-term casuals (i.e. engaged on a regular and systematic basis for a sequence of periods of employment and who would have a reasonable expectation of continued employment)
- conduct its own investigation into any matters pertaining to the employee’s conduct or capacity, including by obtaining the employee’s response and making its own findings; and
- give genuine consideration to what other redeployment opportunities may be available.