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Full Bench quashes order to reinstate labour hire employee to host employer

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In the unfair dismissal jurisdiction, where it is found by the Fair Work Commission (FWC) that an employee has been unfairly dismissed, the primary remedy under the Fair Work Act 2009 (Cth) (FW Act) is for the employee to be reinstated to the position they held immediately prior to their dismissal or another position on no less favourable terms.

In the unfair dismissal jurisdiction, where it is found by the Fair Work Commission (FWC) that an employee has been unfairly dismissed, the primary remedy under the Fair Work Act 2009 (Cth) (FW Act) is for the employee to be reinstated to the position they held immediately prior to their dismissal or another position on no less favourable terms. Reinstatement can be with or without an order to maintain continuity of employment and to restore lost pay.  

Problems may arise when the employee is a labour hire employee who worked for a host employer where the host employer has excluded the employee from their workplace.

This scenario was before the Full Bench of the Fair Work Commission (Full Bench) in CUB Pty Ltd T/A Carlton & United Breweries v Johnson, Chelgrave Contracting Australia Pty Ltd [2021] FWCFB 411. The Full Bench granted leave for CUB Pty Ltd (CUB) to appeal and upheld the appeal against a decision of a single Commissioner which had ordered the reinstatement of a labour hire employee to his employment with CUB.

The employee was employed by Chelgrave Contracting Australia Pty Ltd (Chelgrave), a labour hire employer, as a maintenance fitter. Chelgrave provided labour hire services to CUB and the employee’s employment involved carrying out maintenance work at CUB’s Victorian brewery from May 2017.

While onsite at the brewery, the employee was required to comply with CUB’s health and safety policies. In April 2020, CUB found that the employee had breached its safety rules when he was conducting maintenance work on a palletiser. As a result of the employee’s conduct and previous record, CUB instructed Chelgrave to permanently remove the employee from its worksite.

Chelgrave subsequently terminated the employee’s employment and the employee lodged an unfair dismissal application.

At first instance, the Commissioner was not satisfied that there was a valid reason for dismissal and found that the employee’s dismissal was harsh, unjust and unreasonable. When considering the remedy to be ordered, Chelgrave submitted that reinstatement was not possible because it had no contractual power to make CUB re-employ the employee. The Commissioner did not accept this and concluded that it was appropriate in all of the circumstances to reinstate the employee. An order was made to reinstate the employee to his former position with CUB at its brewery site with continuity of service and with payment of lost pay.

CUB was not party to the initial unfair dismissal proceedings and sought permission to appeal against the decision of the Commissioner on the basis that it was a person who was aggrieved by the decision.

CUB submitted that the Commissioner made an error of principle in ordering the reinstatement of the employee to its worksite. It stated that it had a contractual right to exclude the employee from its workplace and as a result, the employee did not have the capacity to fulfil his duties.

CUB argued that the Commissioner should have concluded reinstatement was impractical and inappropriate in the circumstances.

The Full Bench granted CUB’s application to appeal and upheld the appeal.

It found that Chelgrave was unable to comply with the order to reinstate the employee to work at CUB’s worksite because it had no power in its contract with CUB to do so and as such, reinstatement was inappropriate in all of the circumstances.

The Full Bench noted that the Commissioner had powers to fully inform itself and should have used those powers to review the contract between CUB and Chelgrave.

The Full Bench made an order to quash the order of the Commissioner in so far as it provided for the reinstatement of the employee to CUB’s worksite.

Lessons for employers

Employers should be aware of the FWC’s power under the FW Act to order reinstatement of an employee found to be unfairly dismissed. The FWC may only make an order for the payment of compensation if it is satisfied that reinstatement is inappropriate and it considers that compensation is appropriate in the circumstances.

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