Donald Pettifer v MODEC Management Services Pty Ltd [2016] FWCFB 5243

MODEC is a labour hire company that was providing labour to a third party under a labour hire arrangement. Following a ‘near-miss’ incident, the third party company exercised its right under the labour hire arrangement to direct MODEC to remove the employee from the site. While MODEC did not agree the employee’s conduct warranted this action, it complied with its contractual obligations.

MODEC subsequently attempted to find an alternative role for the employee but was unable to find an appropriate position. At this stage, MODEC terminated the employee’s employment on the basis that he was excluded from the site under MODEC’s contractual arrangements with the third party and therefore could not perform the inherent requirements of his role. The employee argued he was unfairly dismissed by MODEC.

A Full Bench of the Fair Work Commission rejected the employee’s argument that he was dismissed because of his conduct. The Full Bench instead found the dismissal occurred because the employee did not have the capacity to perform the duties which he was engaged to perform and he could not be redeployed elsewhere. This was because, having been prohibited from returning to the site, the employee was incapable of performing the inherent functions of his role.

The Full Bench held there was a valid reason for dismissal and the dismissal was not harsh, unjust or unreasonable in the circumstances.

While this case establishes that in some circumstances a host employer can exercise its contractual rights such that the labour hire employer may validly dismiss its employee, the employee’s labour hire or actual employer must still ensure the contractual arrangements do in fact provide a valid reason and must otherwise treat its employees fairly.