When an assignment of a labour hire employee to a host employer client of the labour hire agency ends, does it amount to a dismissal for the purposes of the Fair Work Act 2009 (Cth) (FW Act)? The resolution of this question will determine whether the employee can access FW Act dismissal remedies, such as claims for unfair dismissal or breach of general protections.

Labour hire assignments

Inherent to the nature of a labour hire agency’s operations is that employees are assigned to a particular client at one point in time, and are withdrawn and reassigned to other clients from time to time while maintaining their employment. A break in service because an employee’s assignment to one host employer ends and there is a period of no work while the agency is seeking to reassign the employee to another host employer would not ordinarily amount to dismissal for FW Act purposes.

Labour hire employees are usually employed on a casual basis, and it is recognised that their employment relationship comprises a sequence of separate contracts of employment offered and accepted on a shift-by-shift basis. Dismissal for FW Act purposes refers to a termination of employment that is brought about by an employer and not agreed to by the employee. The focus is whether the employer’s actions were the principal contributing factor, either directly or indirectly, to the termination of the employment.

When does a labour hire agency dismiss an employee?

The case law shows it is likely that a labour hire agency has dismissed a casual employee for the purposes of the FW Act where:

• the employee works for a single host employer for an extended period;
• the agency removes the employee from the host employer’s site for conduct or performance reasons rather than operational requirements; and
• the agency does not provide the employee with an alternative assignment.

Case law examination of the issue

The Fair Work Commission (FWC) had to resolve this issue recently in Raskov v Adecco Australia (2024). The employee applied for employment with a labour hire agency specifically to be employed at a particular host employer. She worked full-time hours at the host employer, which were then reduced to 28.5 hours per week at her request. The employee regularly worked every week, apart from a short period of leave, for approximately 9 months.

When the host employer alleged the employee had engaged in misconduct, the agency suspended the employee and initiated an investigation. Based on the employee’s responses during the formal disciplinary meeting and the evidence available to the agency regarding the allegations, the employee’s casual assignment with the host employer was ended effective immediately.

The FWC ruled it was the agency, not the host employer, that ended the assignment. The employee’s contract with the agency provided for the host employer to vary or terminate the employee’s assignment at any time by giving 1 hour’s notice. Separately, the agency could terminate the employment at any time by giving 1 hour’s notice, or immediately in the case of serious misconduct. However, the contract did not provide for the agency to terminate the assignment with the host employer. Therefore, the FWC ruled the removal of the employee from the host employer’s site by the agency was not in accordance with her contract of employment.

The agency argued it had not dismissed the employee, rather, the employee remained a casual employee of the agency who was eligible for future client assignments. However, the FWC observed that the agency made no attempt to find alternative work for the employee and ruled that the removal of the employee from the host employer’s site after the host employer made allegations of misconduct was the principal contributing factor, directly or consequentially, in the termination of employment. Therefore, the employment was terminated on the initiative of the agency and the employee could make FW Act dismissal claims against the agency.