THE DECISION OF A FULL BENCH OF THE FAIR WORK COMMISSION (FWC) IN PETTIFER V MODEC MANAGEMENT SERVICES PTY LTD [2016] FWCFB 5243 (MMS CASE) INDICATES THAT LABOUR HIRE EMPLOYERS WILL NOT BREACH UNFAIR DISMISSAL LAWS CONTAINED WITHIN THE FAIR WORK ACT 2009 (CTH) (FW ACT) WHERE THEY DISMISS A WORKER IN ACCORDANCE WITH THE HOST EMPLOYER’S REQUEST PURSUANT TO THE TERMS OF CONTRACT BETWEEN THE LABOUR HIRE PROVIDER AND THE HOST EMPLOYER AND THEY FIRST CONSIDER POTENTIAL REDEPLOYMENT.
ISSUE
In the MMS case, the employee was employed by the labour hire company MODEC Management Services Pty Ltd (MODEC) and was assigned to work with BHP Billiton Petroleum Inc. (BHPB) pursuant to a labour hire contract between MODEC and BHPB. After an unblemished period of around 6 years employment, BHPB considered the employee to have been involved in a “near miss” safety incident and exercised its right under the contract between BHPB and MODEC to require MODEC to remove the employee from site.
MODEC did not concede that the employee’s actions justified BHPB’s demand to remove the employee from site, but complied with BHPB’s instruction to do so.
MODEC sought to find alternative employment for its employee, but nothing could be found. Approximately two weeks after BHPB issued the instruction to MODEC to remove the employee from site, his employment with MODEC was terminated.
The employee made an unfair dismissal claim against the labour hire company, MODEC. This Legal Update is likely to be of interest to labour hire providers.
OUTCOME
At first instance, the single Commissioner dismissed the employee’s claim finding that “MODEC did not rely on any matter related to [the employee’s] capacity or conduct as a reason for his dismissal and that therefore the question of whether the reason for his dismissal was valid under section 387(a) of the FW Act did not arise” [at para 5]. This reasoning seemed to effectively preclude the application of unfair dismissal laws where a labour hire employer had simply dismissed an employee in accordance with the contractual rights of its host employer client.
The employee appealed the decision of the single Commissioner. The Full Bench also found that the dismissal was not unfair, but for a different reason.
The Full Bench found that “BHPB’s instruction that [the employee] was not permitted to work on the BHPB Site represented a matter which went to the [the employee’s] capacity to work. Consequently, [the employee’s capacity] was a matter that required consideration pursuant to subsection 387(a) to determine whether or not it was a valid reason for the termination of his employment” [at para 32].
The Full Bench went on to find that the employee’s incapacity to work on the BHPB site arose directly because of BHPB’s prohibition on him working at the site as distinct from any dispute about his conduct. The Full Bench went on to say that as a consequence the employee “was incapable of working on the BHPB Site in a manner which was akin to a bar or the loss of a form of licence, essential to his capacity to work. Hence [the employee’s] capacity was a factor which required a conclusion in terms of whether it represented a valid reason for the termination of his employment” [at para 33].
Ultimately, the Full Bench determined that the reasons relating to the employee’s incapacity constituted a valid reason for MODEC to terminate his employment and that MODEC was genuinely unable to find suitable alternative employment for him.
IMPACT
The Full Bench distinguished the MMC case from the earlier FWC decision in Kool v Adecco Industrial Pty Ltd T/A Adecco [2016] FWC 925 (Adecco case) where Deputy President Asbury noted 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” [at para 49].
In the MMC case, the Full Bench noted that, unlike in the Adecco case, the terms of the labour hire contract was in evidence and that the factual situation was somewhat different. The Full Bench observed that in the Adecco case, the Deputy President had found that the employer’s failure to consider redeployment constituted an element of unfairness, which was quite unlike the MMC case, where MODEC had thoroughly considered redeployment options and that there was nothing to suggest that MODEC colluded with BHPB to remove the employee from site.
Labour hire employers should carefully consider the terms of the contract with any client before acting on a client’s instructions to remove any of its employees from the host’s site. A thorough procedure should be followed and redeployment options explored before making any decision to terminate an employee’s employment in consequence of a host employer’s instruction to remove a particular employee from site.
CONTACT
Whitehall Workplace Law
Level 14, 330 Collins Street, Melbourne, VIC 3000
