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Labour hire company and placement company penalised for discriminating against prospective employee

The general protections provisions of the Fair Work Act 2009 (Cth) (FW Act) are wide-ranging in the sense that they provide protections to, and prohibit adverse action by, persons and entities beyond an employee and an employer.

The general protections provisions of the Fair Work Act 2009 (Cth) (FW Act) are wide-ranging in the sense that they provide protections to, and prohibit adverse action by, persons and entities beyond an employee and an employer.

The provisions also relate to conduct by or directed at prospective employees and employers, existing or prospective independent contractors as well as industrial associations and officers or members of industrial associations.

Further, any conduct by a person which “advises, encourages or incites, or takes any action with the intent to coerce” another person to engage in unlawful adverse action may also be found to have contravened the FW Act.

Accordingly, it is important that any person or entity that might fall under any of the abovementioned categories is aware of the obligations imposed upon them by the general protections provisions of the FW Act.

In a recent decision of the Federal Court of Australia (FCA), a labour hire and recruitment company as well as a mining services company have been ordered to pay pecuniary penalties for contravening the FW Act in relation to unlawful adverse action taken against a prospective employee (Australian Building and Construction Commissioner v CoreStaff Pty Ltd (No 2) [2021] FCA 1149).

This penalty decision followed an earlier decision by the FCA (Australian Building and Construction Commissioner v CoreStaff WA Pty Ltd [2020] FCA893) which found that CoreStaff Pty Ltd, as a prospective employer, had discriminated against a prospective employee by refusing to employ him as a grader operator because he was 70 years old.

That earlier decision had also found that Gumala Enterprises Pty Ltd, which had engaged CoreStaff to recruit a grader operator, had advised, encouraged or incited CoreStaff to discriminate against the prospective employee because of his age.

When CoreStaff initially referred the individual to Gumala as a suitable candidate for the position, Gumala responded to the effect that they had considered him in a previous application but that his age was a concern. CoreStaff then advised the recruit that he had been unsuccessful in his application because of his age.

In determining the appropriate penalty to impose on CoreStaff, the FCA accepted that this incident appeared to be an isolated incident and that CoreStaff had taken steps to discipline its employee upon becoming aware of the incident. However, the FCA noted that the nature of CoreStaff’s business was recruitment and labour hire for other companies. In that context, CoreStaff held itself out to be an expert in employment relationships and should therefore be held to higher standards of understanding employment law and discrimination. It also noted that no steps had been taken to apologise to the individual.

In determining the appropriate penalty to impose on Gumala, the FCA acknowledged Gumala’s submission that its core purpose was to provide funding for services that relieve Aboriginal members of the community from the adverse impacts of past discrimination based on their race. It also accepted that there was no inference that this incident reflected a broader culture of discriminatory views. However, the FCA was of the view that “No organisation, regardless of its beneficial purpose and role in the community, is entitled to complacency when it comes to discrimination in the employment environment.”

On that basis, the FCA ordered CoreStaff to pay a pecuniary penalty of$20,000 and Gumala to pay a pecuniary penalty of $9,000 (both equally distributed between the individual and the Commonwealth).

Lessons for employers

Employers should ensure that their policies and procedures clearly set out the employer’s position on equal employment opportunities and anti-discrimination. Further, employers should ensure that anyone involved in recruitment processes, whether that is internal human resources or recruitment employees or external recruitment agencies, is made aware of and trained in those policies.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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