INSIGHT

Don't be too quick to fire your labour hire

By Andrew Wydmanski
Employment & Safety

In brief 3 min read

In a reminder of the importance of complying with all redundancy requirements in the Fair Work Act 2009 (Cth) (the FWA), the Fair Work Commission (the FWC) has held that a labour hire company did not have a valid reason to terminate five mine workers after they were no longer needed on site, as it had failed to meet its consultation and redeployment obligations.

Key takeaways

  • Labour hire companies must comply with the FWA's redundancy requirements, including in relation to consultation and redeployment. If clients send employees back that are no longer needed, the labour hire company is required to take reasonable steps to redeploy them to a suitable role (and not just make them compete for new work with others).
  • If you cannot physically meet with your workforce to discuss possible redundancies due to COVID-19 restrictions, make sure you still meaningfully consult with them, eg in a virtual meeting.

Background

The applicants were employed by WorkPac Mining Pty Ltd (the respondent), a labour hire company. They were working on a development contract for PIMS mining (PIMS) at the Appin Coal Mine operated by Illawarra Coal Holdings Pty Ltd (South 32).

The applicants were made redundant (together with 17 others) after the COVID-19-related downturn in the coal industry. PIMS advised the respondent of a possible redundancy scenario in late April 2020, but the respondent did not pass on this information to the applicants. PIMS advised the respondent of the final decision in late May 2020 and notified the respondent's employees, under its control, of this decision in site meetings between 20 May and 23 May 2020.

Due to COVID-19 restrictions, no respondent's representative could attend these meetings because South 32 would not allow them onto the mine. The respondent made contact with the affected employees by telephone on 1 and 2 June 2020.

During this time, South 32 also signed a supplementary contract with the respondent to employ 90 experienced coalminers to work at the mine. Four of the applicants were put forward by the respondent to South 32 as part of the recruitment process, but none were redeployed. The fifth applicant was considered not qualified for this work.

The applicants argued that the respondent did not comply with section 389 (genuine redundancy) of the FWA because it:

  • still required the work to be performed;
  • did not consult properly with the applicants; and
  • did not take reasonable steps to redeploy the applicants.

The decision

Commissioner Riordan ruled that the work required under the development contract and the supplementary contract were not the same job, so s389(1)(a) of the FWA (requiring that a job no longer needs to be performed) was met.

However, the consultation obligations under s389(1)(b) of the FWA were not satisfied. The FWC rejected that 'the brief telephone conversation or the pro forma letter that was sent to the Applicants satisfies the Respondent’s consultation obligations'. Instead, at least a virtual meeting should have been conducted, where the applicants could have been meaningfully consulted. The respondent should have also advised the applicants of possible redundancies when it learned about them in April.

The redeployment requirement under s389(2) of the FWA was also breached. The Commissioner noted:

'The Respondent does not gain an exemption from s389(2) of the Act simply because it is a labour hire company. If that was the case, then every employer in Australia would outsource its workforce to a labour hire company in order to avoid its obligations under the Act.'

Instead, the respondent should have advised South 32 that it was legally obliged to on-board the four employees who were qualified for the supplementary contract, without requiring them to compete with others for those roles.

The respondent's failure to meet its redeployment obligations for the four eligible employees and its consultation obligations for all five meant it had no valid reason to terminate their employment, making each dismissal unfair.

If you would like to learn more about workforce restructuring and redundancies, this Allens webinar will take you through the key practical and legal issues.