Worker contends interview process and permanent role promises created direct employment relationship
The Fair Work Commission (FWC) recently dealt with an unfair dismissal application from a worker who claimed he was dismissed by a major equipment company, despite being employed through a labour hire agency.
The worker argued that he was effectively employed by the host company because he was interviewed by their workshop manager, completed their induction process, and was told he could become a permanent employee in the future.
He contended that the arrangement was a sham designed to avoid employment obligations, particularly given that both companies shared the same corporate parent.
However, the host company maintained that the worker was never their employee and had always been employed by the labour hire agency under a legitimate commercial arrangement.
The worker applied online for a job with the host company and stated he was "assured" he would be working with them directly.
He received a call from an employee at the labour hire agency about a position at the host company, who asked questions about his qualifications before passing his information to the host company for consideration.
The worker then had what he described as an interview with the workshop manager at the host company on 15 April 2024.
According to the workshop manager's evidence, this was a meeting rather than an interview, occurring because there was a need for a temporary worker to fill a storeperson role. The workshop manager had no authority to offer anyone a full-time role.
During this meeting, the workshop manager told the worker that "it was not uncommon for workers who started out as labour hire employees, to be offered permanent employment with [the host company] when a permanent position became available."
"However, this was unlikely to occur for at least six months, as [the host company] was required to pay [the labour hire agency] a recruitment fee if it directly hired a labour hire employee within six months of them being placed with the business," the FWC added.
Following the meeting, the worker was contacted by the labour hire agency for a medical assessment, which he completed successfully.
On 7 May 2024, the labour hire agency sent the worker an email asking him to complete onboarding registration. On 13 May 2024, the worker signed an "Application for Employment" clearly headed as being from the labour hire agency.
The following day, he signed "Terms and Conditions of Employment" from the labour hire agency, which stated that "the Company provides labour hire services to various clients. You will be employed by the Company on a casual basis from time to time to provide services to our clients at times required by the client."
On 14 May 2024, the worker received a "Notice of Assignment" email clearly identifying the labour hire company as the employer and the host company as the client.
This document specified his position as storeperson, casual employment type, hourly rate of $31.00 plus penalties, and noted that the hourly rate included 25% casual loading.
The worker commenced work on 15 May 2024 and was paid by the labour hire agency throughout his placement until his employment ended on 15 January 2025.
The worker completed a site induction checklist on 15 May 2024, where the labour hire agency was listed as the company name.
Throughout his placement, the worker submitted timesheets to the labour hire agency through an app called "FastTrack," while the host company used a different app for its direct employees.
The worker wore a labour hire agency uniform and received pay from the latter throughout his employment.
The worker completed several online induction courses requested by the host company between May 2024 and January 2025.
An employee relations manager explained that the host company engaged a software company to assist with delivery of safety induction courses for temporary labour workers. On 15 January 2025, the labour hire agency notified the worker that his employment had been terminated due to "performance concerns along with challenging market conditions."
The FWC noted that it was logical for the host company to meet with the worker and ensure he was trained on their safety procedures since he would be working in their warehouse.
However, this involvement did not establish an employment relationship between the worker and host company.
The FWC applied established contract law principles to determine whether a valid contract existed between the worker and host company, examining intention to create legal relations, offer and acceptance, and consideration.
The Commission found no objective evidence of an intention by the host company to enter into legal relations with the worker.
Regarding offer and acceptance, the FWC found that even on the worker's own recollection, the workshop manager told him he had to "see other people" and there was no evidence that any firm offer of employment was made.
The Commission stated there was "no evidence from either the worker or [the host company] to indicate that [the worker] was offered employment with [the host company] by [the workshop manager], which he accepted."
On consideration, the FWC noted that while the worker's wages were paid by the labour hire agency, this was not necessarily determinative as employers can outsource payroll.
However, the Commission found that the host company engaged the labour hire agency to provide labour, with no agreement for how the labour hire agency should pay its workers.
The FWC concluded there was "no consideration flowing from [the host company] to [the worker]."
The worker argued that the arrangement was a sham because both companies had a common overseas owner and were related entities within the same corporate group.
The worker relied on guidance stating that where labour hire agencies and host employers are related entities, the host employer may be found to be the employer regardless of contractual arrangements.
The FWC acknowledged the worker's argument had some merit, referring to cases involving labour hire companies supplying labour to related companies. However, the Commission noted that arrangements would only be found to be shams where circumstances indicated they lacked rational business explanation and existed only to avoid employment obligations.
The FWC found that the labour hire agency charged commercial rates for providing labour, also provided services to other companies and government entities, and had a separate management structure.
The host company used several labour hire providers, not just this agency. The Commission concluded that "the arrangement is not a sham and there is therefore no reason to look behind the corporate structure when considering whether a contract exists between [the worker] and [the host company]."
The FWC ultimately found that "there was no contract in existence between [the worker] and [the host company]. There was no intention to create legal relations, no offer and acceptance and no consideration. Accordingly, [the worker] was not employed by [the host company]. He was employed by [the labour hire agency]."
The Commission determined that the worker was "not employed by [the host company] and was therefore not 'dismissed' within the meaning of s.386 of the Act." The jurisdictional objection was upheld and the unfair dismissal application was dismissed.
