Scrutiny for Labour Hire Arrangements

Jamie Orlikowski v IPA Personnel Pty Ltd (26 June 2009)

In a decision that threatens to cause headaches in the labour hire sector, SDP Lacy has granted an application by Mr Orlikowski (the Applicant) to join the Australian Quarantine and Inspection Service (AQIS) as a second respondent to his unfair dismissal application against labour hire agency IPA Personnel Pty Ltd (IPA).

The Applicant was engaged by AQIS through Workplace International Pty Ltd (Workplace) in August 2004, and remained with the company until his termination in January 2009. In August 2008 IPA successfully tendered for the provision of labour hire services to AQIS, from which point on the Applicant was engaged through IPA. Throughout the 4½ year period, AQIS exercised significant control over the activities of the Applicant, although he was paid through Workplace until August 2008 and subsequently through IPA.

Gerard McKeown of counsel, appearing for the Applicant, submitted that the labour hire agencies were nothing more than a payment mechanism. In addressing this point His Honour said as follows (at paragraph 42):

• “The facts in this case suggest the arrangement between IPA and AQIS may have been one of “payrolling”.

If this were the sum of IPA’s role it would seem to follow that AQIS is the true employer. Nevertheless, His Honour admitted the possibility of a ‘joint-employment’ situation arising when the following condition is met (described at paragraph 42):

• “The fundamental question is whether two, otherwise unrelated, legal entities share or co-determine those matters governing essential terms and conditions of employment which depend on the control one employer exercises, or potentially exercises, over the labour relations policy of another.”

His Honour further found that the legislative prohibition against lodging a second application in respect of a termination was not intended to prohibit a joinder application, and used the broad discretion conferred by s.111(1)(1) of the Workplace Relations Act (1996) in allowing the application.

It should be noted that the decision was not a finding that the respondents were joint-employers, as His Honour was only required to be satisfied that it is arguable that either or both respondents were the employer. However His Honour did make some unfavourable comments at paragraph 42 about the effects of labour hire arrangements:

• “While labour hire services facilitate flexibility the process has the potential to undermine collective bargaining, occupational health and safety, vicarious liability, accountability, job security and workplace harmony.”

Such comments could indicate that labour hire arrangements may be more heavily scrutinised in future. In view of this decision labour hire companies and their clients ought to be vigilant about how such arrangements are structured, or face a potential barrage of claims.