Thursday, 19 November 2020

Labour hire employee reinstated after being unfairly dismissed following client’s demand for his removal

Please note this decision has now been overturned by the Full Bench of the Fair Work Commission. Click here for our latest update regarding this case.

In a decision on 4 November 2020, the Fair Work Commission (FWC) ordered labour hire company, Chelgrave Contracting Australia Pty Ltd (Chelgrave) to reinstate an employee, Mr Chaya Johnson, to his position as a maintenance fitter for its client and host employer, Carlton United Breweries (CUB) after he was unfairly dismissed and despite CUB directing Chelgrave to remove Mr Johnson from its work site.

Mr Johnson was employed by Chelgrave in 2017 and placed with CUB to provide maintenance services to CUB’s site in Abbotsford where he worked for nearly the entire period of his employment.

Chelgrave submitted to the FWC that there were a number of allegations relating to Mr Johnson’s poor behaviour and conduct throughout his employment which were communicated to Chelgrave by CUB, however Chelgrave sought to resolve these issues informally and did not issue Mr Johnson with any warnings for his conduct.

On 21 April 2020 there was an incident at CUB’s worksite whereby Mr Johnson commenced work on a palletiser alone after his colleague left work ill, and failed to properly isolate the palletising machine, breaching CUB’s safety rules. Following the safety breach, Mr Johnson left the palletiser area, and it was alleged that he delayed in properly reporting the incident.

Chelgrave immediately engaged an independent investigator to investigate this incident who concluded that Mr Johnson did not do everything he should have, but that he could not be held entirely responsible for what happened, for reasons included alleged inadequate training and his colleague’s departure. It was therefore recommended by the independent investigator that Mr Johnson be issued with a written final warning for his unintended failure on 21 April 2020.

On 28 May 2020, CUB informed Chelgrave by email that it wanted Mr Johnston permanently removed from its work site due to the safety incident and multiple previous occurrences of unacceptable behaviour. Following this email, Chelgrave summarily dismissed Mr Johnson.

Mr Johnson then lodged an unfair dismissal application with the FWC.

Valid reason

Chelgrave submitted that its decision to summarily dismiss Mr Johnson was attributed to CUB’s direction to remove Mr Johnson from its site, Mr Johnson’s conduct on 21 April 2020 and his record of poor behaviour.

The FWC was satisfied that Mr Johnson breached CUB’s safety rules and that his conduct on 21 April 2020 was not to be regarded as a trivial misdemeanour because plainly it could have had far more serious consequences than it did. However, his culpability was reduced because of the poor decision making of those around him and because he was not solely responsible for the breach.

The FWC also noted that while some of the previous allegations relating to Mr Johnson’s conduct were discussed with Mr Johnson, many were not, and whilst his behaviour was “not exemplary” there were no documented warnings.

Given there was no reasonable or systematic attempt by Chelgrave or CUB to document concerns about Mr Johnson’s communications with it or CUB or to caution or warn him about repetition of the matters which led to those concerns, the FWC found that Chelgrave and CUB’s general conduct concerns did not constitute a valid reason for Mr Johnson’s dismissal.

The FWC therefore found that actions did not amount to serious misconduct and there was no valid reason for dismissal.

Labour hire considerations

In making this decision, the FWC took into account the labour hire arrangement between Chelgrave and CUB.

As above, Chelgrave had submitted there was a valid reason for termination on the basis that CUB had instructed Chelgrave to remove Mr Johnson from its worksite in accordance with its labour hire arrangements and it did not have a contractual power to reinstate Mr Johnson at CUB’s work site.

Notably, the FWC emphasised 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.

The FWC also noted that Chelgrave had not submitted its contract with CUB in evidence so it could not make findings about what its contractual obligations were, and that it could not just be inferred without reviewing the contract that there was a contractual obligation to remove an employee from a worksite if instructed to do so. However, the FWC did indicate that if such evidence had been submitted, this would have been a relevant consideration in its decision.

The FWC further criticised Chelgrave’s actions in departing from the investigation report’s recommendation to issue Mr Johnson with a final warning and emphasised that dismissal was not supported by the report’s findings. The FWC therefore determined that there was no independent reasoning on Chelgrave’s part in making the decision to terminate and there was no evidence that a dismissal had been conceived prior to CUB’s direction to remove Mr Johnson from its worksite.

The FWC also found that Chelgrave had failed to consider whether Mr Johnson could be redeployed to another client’s site, which likely would have been an appropriate outcome in the circumstances.

The FWC therefore determined that the dismissal was unfair and ordered that Mr Johnson be reinstated not only to Chelgrave but also to his pre-dismissal position at CUB, and be paid an amount for the remuneration lost because of the dismissal, less a deduction of 15% for reasons of his safety breach.

Lessons for employers

Of particular significance for employers in this case is the FWC’s willingness to order that Chelgrave reinstate Mr Johnson to CUB’s work site, despite CUB not being a party to the proceedings, and previously indicating to Chelgrave that it did not want Mr Johnson working at its site. This decision means that host employers may be forced to return labour hire employees to their original roles, even where they are not involved in the unfair dismissal proceedings as the direct employer, thereby losing the flexibility associated with labour hire arrangements.

This case also highlights that where a labour hire worker is dismissed at the instruction of a host employer, the determination of whether there was a valid reason for dismissal will depend upon the circumstances of the case.

A relevant issue will include the terms of the contract between the host employer and the labour hire employer. The FWC will also take into account a failure by a labour hire employer to form an independent view about whether the employee has engaged in misconduct if that is alleged and whether consideration has been given as to whether there are any opportunities of redeployment to avoid a dismissal.

Case: Chaya Johnson v Chelgrave Contracting Australia Pty Ltd [2020] FWC 5784


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.