Worker hired through labour hire company challenges employment status

Who's the true employer? Case examines parties' rights and obligations

Worker hired through labour hire company challenges employment status

The Fair Work Commission (FWC) recently dealt with a case involving a worker who filed a general protections dispute application against an employer.

The worker alleged that she was dismissed by the employer after working for only nine days. The employer objected to the application, arguing that the worker was not an employee and therefore could not have been dismissed.

In this case, the FWC had to determine whether the worker was indeed an employee of the organisation or not. The decision would ultimately determine if the worker had the right to bring a general protections dispute application against the employer for alleged dismissal.

Background of the case

The worker, Dr Clare McGrory, was a highly skilled professional engaged as a statistician (Health Data) to work for the Australian Digital Health Agency (ADHA). The ADHA is a government agency responsible for the national digital health strategy and the development and delivery of digital health services. The agency relies on a mix of employees and contractors to carry out its functions.

Dr McGrory was engaged through a labour hire agency, HiTech Group Australia Limited (HiTech), which specialises in providing IT and professional services to government agencies and private sector clients.

HiTech had a contract with the ADHA to supply the services of a statistician, and Dr McGrory was named as the specified personnel in the work order between HiTech and the ADHA.

The engagement was intended to be for an extended period, with an initial term of 8 months and the option to extend for a further 12 months. However, Dr McGrory's assignment was terminated after just nine days, from 6 to 15 November 2023. The reasons for the termination were not disclosed in the FWC's decision.

Following the termination of her engagement, Dr McGrory lodged a general protections dispute application under section 365 of the Fair Work Act 2009.

The general protections provisions of the Act are designed to protect workplace rights and freedom of association, and to protect workers from discriminatory or adverse action by their employer. In her application, Dr McGrory alleged that she had been dismissed by the ADHA in contravention of the general protections provisions.

The contractual relationship

The FWC closely examined the contractual relationship between the worker and the employer. It was revealed that the worker had a written contract with a third-party labour hire company, which comprehensively outlined the rights and duties of the parties.

The contract specifically referred to the worker as a "subcontractor" and emphasised that the relationship was that of an independent contractor, not an employer-employee relationship.

The contract also contained various clauses that further supported the independent contractor status, such as the worker's obligation to indemnify the labour hire company against liability, the requirement to conform with legislative and regulatory requirements at her own cost, and the agreement that any title to work undertaken for the employer vested solely in the employer.

Determining employment status

In determining whether the worker was an employee, the FWC relied on the principles set out by the High Court in recent cases.

The FWC emphasised that where the rights and duties of the parties are comprehensively committed to a written contract, the legal rights and obligations established by the contract are decisive of the character of the relationship.

The FWC also noted that the characterisation of the relationship often hinges on two key considerations: the extent to which the putative employer has the right to control how, where, and when the putative employee performs the work, and the extent to which the putative employee can be seen to work in his or her own business, as distinct from the business of the putative employer.

The FWC's findings

After carefully examining the contractual relationship and the surrounding circumstances, the FWC concluded that the worker was not an employee of the employer.

 The FWC found that there was no evidence of any contract or relationship of employment between the worker and the employer. Instead, the relevant contract was between the worker and the labour hire company.

As the decision states, "On the facts, I find that [the worker] was not an employee of [the employer]. It follows that she could not have been 'dismissed' by [the employer]."

Ultimately, the FWC dismissed the worker's application, as it found that she was not an employee of the employer and, therefore, could not have been dismissed.

The decision highlighted the importance of carefully drafting and adhering to contractual agreements when engaging workers, as the terms of the contract play a crucial role in determining the nature of the relationship.

The FWC reiterated that "the characterisation of a relationship as being either one of employer and employee, or one involving the engagement of an independent contractor, is ultimately an evaluative judgment that takes into account the totality of the parties' contractual rights and obligations."

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