No going back? Fair Work Commission examines ability to reinstate labour-hire workers

By Fay Calderone

The Full Bench of the Fair Work Commission (FWC) overturned the decision of Commissioner Wilson to reinstate a labour hire employee to his former worksite on the grounds that the receiving company, Carlton United Breweries (CUB), had a contractual right to order his removal.

How did we get here?

Commissioner Wilson found that Chelgrave Contracting Australia (Chelgrave) had unfairly dismissed an employee after CUB insisted on his permanent removal following a safety incident.

Chelgrave was criticised for not engaging in ‘independent reasoning’ regarding the merits of such a demand for removal before they dismissed the employee, nor did they consider redeploying the employee to another one of their sites.

The employee was ordered to be reinstated back at CUB.

Don’t we get a say in this?

The Full Bench found[1] the reinstatement order was ‘inappropriate in all the circumstances’ as Chelgrave had no contractual power to force CUB to allow the employee back on site.

Commissioner Wilson noted in the decision that the Contract between Chelgrave and CUB was not in evidence and he did not accept Chelgrave’s arguments regarding its contractual powers.

The Full Bench noted that the failure of Chelgrave to put the Contract into evidence was cause for criticism. However, they found that as the Commissioner both ‘knew of the existence of the contract and knew that its contents was critical’, he should have engaged the FWC’s powers to compel documents and conduct inquiries.

The Full Bench also made the general observation that Commission Members dealing with matters involving a third party should:

‘…take extreme care to ensure the orders they are contemplating are capable of being complied with. This is especially the case given the increased incidence of labour hire contracts and working arrangements. In such circumstances an invitation to the third party to make submissions on the proposed order may resolve issues of procedural fairness.’

Key takeaways

  • Organisations using labour-hire workers may be invited to provide evidence in FWC proceedings brought by a worker against their employer, even if they themselves are not a party and may be permitted to appeal decisions that affect them.
  • Labour hire businesses should be cautious to engage in their own independent reasoning before acting on a business’ demand to remove an employee and should consider contractual arrangement and alternative placements before dismissal. Although not in issue in this case, it is worth noting that particular caution should be exercised when a demand is on prohibited grounds given the risk of being involved in a Fair Work Act contravention.

Labour hire under fire

Labour hire arrangements are increasingly under scrutiny given the Opposition’s platform for Industrial Relations (IR) Reform and following the Full Federal Court’s decision in Rossato to provide leave entitlements to casual workers employed under such conditions.

Hall & Wilcox is closely monitoring these developments. Please contact our national Employment team if you would like further information about how they may affect your business.

This article was written with the assistance of Andrew Banks, Law Graduate. 

[1] CUB Pty Ltd T/A Carlton & United Breweries v Chaya Johnson; Chelgrave Contracting Australia Pty Ltd [2021] FWCFB 411


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