Home - FWC powers to reinstate in unfair dismissal cases are limited in labour hire arrangements

UpdatesFeb 10, 2022

FWC powers to reinstate in unfair dismissal cases are limited in labour hire arrangements

The powers of the Fair Work Commission (FWC) to order compensation to a person for unfair dismissal must not be made unless the FWC is satisfied that reinstatement of the person is inappropriate.

Reinstatement means to ‘put back in place’, or to reappoint the person to the position in which they were employed immediately before the dismissal.

Circumstances in which reinstatement might be inappropriate include where the employer no longer conducts a business into which the employee may be reappointed, and if the employee is incapacitated because of illness or injury.

The reality is that reinstatement is rarely ordered. In the 69 cases between April and December 2021 in which the FWC awarded a remedy for an unfair dismissal applicant, reinstatement was only ordered in 10.

Can the FWC order reinstatement where the position is at the worksite of a third-party?

This question was considered in Johnson v CUB (2021). In this case, a maintenance fitter employed by a labour hire company was on-hired to a brewery. The brewery exercised its contractual right to request the permanent removal of the employee from its premises, following issues concerning non-compliance with safety requirements. The employer labour hire company then dismissed the employee because it did not have any other position at the same level as the position at the brewery.

The FWC found the dismissal to be unfair and ordered the employee’s reinstatement at the brewery.

On appeal, the FWC Full Bench ruled the employer was unable to comply with that order because of the brewery’s contractual entitlement to exclude the employee from its premises. The Full Bench found that the FWC at first instance did not consider the employee’s incapacity to work at the brewery in ordering reinstatement to that worksite.

The Full Federal Court accepted the argument that the FWC did not have any means of compelling the brewery to surrender its legal rights to prevent the employee from entering its premises. However, the Court noted that will not always be the case in a labour hire arrangement. A host or client of a labour hire company may not have the unqualified rights to exclude labour hire employees as provided in the contract in this case.

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