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‘Who’s the Boss?’ – Long term Contractors and their relationships with the labour hire company and the client where the contractor works?

Why is this an important issue for Employers & Employees

Just who looks after and how performance concerns are considered and addressed were central issues to a recent Fair Work commission (FWC) matter. It provides a timely reminder to employers, contracting entities and contracted employees in terms of who works for who and how policies and procedures need to be applied and followed. The HBA workplace investigations and dispute resolution services work in Sydney, Melbourne, Brisbane, Canberra and Perth as well as most regional areas, and can assist with resolving complaints and disputes when they arise in the workplace.

Earlier this month the FWC ordered a labour hire company to reinstate an employee to his former job at Carlton United Breweries (CUB). The employee had been sacked due to a safety incident after the client (CUB) had demanded his permanent removal. Chelgrave Contracting Australia had dismissed the employee who worked for them as a contractor with CUB, after he had been employed as a maintenance fitter for more than three years Carlton United Breweries' Abbotsford site. The dismissal came after an investigation by CUB found the employee had broken safety rules by failing to isolate a palletising machine he was working on.

The investigation on the maintenance worker concluded he could not be held entirely responsible as access was a "known difficulty", additional signage was needed and there were "clearly deficiencies within the system".

Rather than dismissing the worker, it was found that Chelgrave should have issued a final warning over the fitter's "unintended failure" to adequately isolate the equipment, however, the labour hire company instead dismissed him the same day as its client (CUB) said it did not want him back.

The employee’s dismissal letter stated that because of the incident "CUB have instructed Chelgrave that you are not to return to site and as a result your employment with Chelgrave is terminated", effective immediately.

Chelgrave contracting went on to tell the FWC that CUB had given additional reasons for demanding the employee's immediate removal, including "multiple occurrences of unacceptable behaviour". CUB also insisted that the employee had not improved his behaviour and as a result, they believed he "could not be trusted to comply with lawful directions and procedures and therefore posed a safety risk, to himself and others operating heavy machinery".

Commissioner Wilson found Chelgrave (as the employer of the worker) engaged in "no independent reasoning" before dismissing the fitter, and there was "no evidence that anyone in Chelgrave thought before that point" that his conduct warranted it. Also, it was apparent that Chelgrave had not even considered first, redeploying the employee to another one of its work sites.

Commissioner Wilson was satisfied the employee had breached CUB's safety rules in "failing to do everything he could to test that the palletiser was fully isolated and did not correctly establish the safest access and egress to the palletiser". The Commissioner also acknowledged that the employee’s communications over the past year with Chelgrave and CUB on important matters such as when he proposed to stop work, expected to be late, was absent or needed to work overtime, were "not exemplary", and that therefore some of these issues could have been considered grounds for disciplinary action. However, the Commissioner said Chelgrave "did not take such action, and instead only discussed some but apparently not all of the matters" with the employee

>"There has been no reasonable or systematic attempt by Chelgrave or CUB to document concerns about [the employee’s] communications with it or CUB or to caution or warn him about repetition of the matters which led to those concerns," he said.

>"It is not even clear which of the matters identified as concerns were known to Chelgrave before dismissal," he said, adding that some were "most likely merely irritants known only to CUB and expressed to no one". Because "at best" the fitter was counselled about some matters but not warned, Commissioner Wilson said the general behavioural or conduct concerns "do not tip the balance" in favour of a finding Chelgrave (as the employer) had a valid reason to dismiss him.

Commissioner Wilson said the fitter's dismissal was harsh as it was "disproportionate to the established facts before Chelgrave" and unjust as it relied on general behavioural and conduct matters that were not adequately put to him as performance criticisms and he did not get a chance to respond.

The dismissal was considered to be further unreasonable due to other contributing factors that were not taken into account accordingly.

Chelgrave argued that they held no contractual powers to advise CUB to reinstate the employee and insisted that it would be unprofessional to do so, due to the employee’s "history of poor work performance" and "loss of trust and confidence".

The contract in question was not presented in evidence and as a result, Commissioner Wilson did not accept that the contract lacked "Contractual power with CUB over the situation" nor did he accept that Chelgrave was somehow "powerless" on the subject. The Commissioner was also unpersuaded there was a loss of trust and confidence that would make reinstatement to the fitter's former position inappropriate.

Commissioner Wilson stated that the employee would be "living in a fantasy world if he did not now realise that his supervisors at CUB thought his level of communications required improvement".

Chelgrave were given a fortnight to reinstate the employee to his former position at CUB but reducing his back pay by 15% to factor in his safety failings during the incident. The Commissioner said he (the employee) was "now on notice, through this decision, that his performance on these matters must be demonstrably and sustainably improved".

Commissioner Wilson said it would have been unjust to penalise the employee any further for behavioural issues as he was not satisfied that "these concerns were actually held by Chelgrave".

To conclude, The Commissioner added "at best it was acting as a late-coming and out-of-the-loop surrogate on these matters for CUB, which in turn never counselled or warned the employee".


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