Fitsum Derar v Recruitco Pty Ltd

[2013] FWC 9791

[2013] FWC 9791

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Fitsum Derar
v
Recruitco Pty Ltd
(U2013/13403)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 12 DECEMBER 2013

Application for unfair dismissal remedy - termination at the initiative of employer - dismissed for purposes of s.386 - labour hire casual employee.

[1] On 10 September 2013 Mr Derar lodged an application pursuant to s.394 of the Fair Work Act 2009 (the FW Act) on the basis that he had been unfairly dismissed by Recruitco Pty Ltd (Recruitco). The application was not the subject of conciliation because Mr Derar requested that it proceed directly to arbitration.

[2] Mr Derar's application was the subject of a determinative conference with me on 2 December 2013 for the express purpose of considering whether Mr Derar was dismissed such that he could pursue this application. In these proceedings Mr Derar was represented by Mr Bourne, of counsel and Recruitco, by Mr John, of counsel. The parties have acknowledged that Mr Derar can only pursue this application if he was dismissed. The majority of attention in this respect went to whether Mr Derar was terminated at the initiative of the employer.

[3] The background to the matter is that Recruitco is a labour hire company which provides labour hire employees to businesses which include IGA Distribution. Mr Derar signed an employment agreement with Recruitco on 9 July 2007. In that employment agreement he acknowledged that he would be placed on a register for assignment to work with Recruitco clients. He also acknowledged his obligations with respect to any such work and his relationship with Recruitco.

[4] On 12 July 2007 Mr Derar acknowledged completion of an Induction Checklist for a work assignment with IGA Distribution (IGA). He commenced his work assignment with IGA shortly after completing that induction process. Mr Derar was paid by Recruitco as a casual employee and generally worked hours determined by IGA. He worked exclusively for IGA. His work was of a regular and systematic nature with the exceptions relating to leave periods.

[5] At some time after he commenced the assignment with IGA Mr Derar was offered weekly hire employment by IGA but declined this offer.

[6] Recruitco and IGA had no issue with Mr Derar's attendance or work performance until Mr Derar was absent on a number of occasions from early 2013. The extent of those absences and the extent to which Mr Derar advised IGA and Recruitco of these absences is disputed. After some 3 weeks off work Mr Derar returned to work in early August 2013. A few days later Mr Derar was again absent because of the birth of his child. The parties dispute the extent to which he advised IGA and/or Recruitco of the reason for and duration of this absence.

[7] On 21 August 2013 Mr Todd of Recruitco advised Mr Derar that IGA had terminated his IGA assignment. The details of that advice are disputed as is the extent to which Mr Todd did or did not advise that Recruitco would seek alternative placements for Mr Derar.

[8] On 23 August 2013 Recruitco discussed with Mr Derar a placement at the Royal Adelaide Show. The parties dispute the basis for, and content of that discussion and the extent of any employment offer. The parties also disagree over whether Recruitco made a further offer of a work assignment to Mr Derar on 6 September 2013.

[9] Mr Derar's position is that whilst he was paid as a casual employee, there was a shared expectation that he would attend work each day. Given Mr Derar's exclusive work with IGA, he asserts that this defined his casual employment contract. Further, that his absences were supported by Doctor's certificates provided to either Recruitco or IGA. Mr Derar asserted that both IGA and Recruitco were aware that he had just become a father and that he was absent from work on and around 23 August 2013 for this reason. Mr Derar asserts that on 21 August Mr Todd of Recruitco advised him that his assignment with IGA had been terminated by IGA on the basis that he had not communicated his absences. Mr Derar asserts that he expressed frustration that Mr Todd had not clarified the IGA concerns and supported him. Mr Derar asserts that in a subsequent discussion on 21 August 2013 he sought a separation certificate and advised that he would pursue an unfair dismissal application. Mr Derar asserts that the tentative employment offer put to him on 23 August 2013 did not suit him because of its short term nature and because of his new born baby. Finally, Mr Derar advised that he did not recall any further employment offer or message to that effect left by Recruitco

[10] On this basis, Mr Derar asserts that his employment was terminated by Recruitco on 21 August 2013 such that he is able to pursue this application.

[11] The Recruitco position is that Mr Derar was engaged as a labour hire casual employee under an agreement which clearly envisaged multiple assignments. Recruitco referred to Mr Derar's lengthy absences in July and August and to the IGA advice that Mr Derar's assignment was terminated. Recruitco assert that Mr Todd did not terminate Mr Derar's employment as a labour hire employee on 21 August 2013 and was not aware that he had effectively terminated his employment on that day although Mr Todd understood that Mr Derar wanted to take some further time off work because he had just had a baby but would be available for later work. Recruitco sought other work for Mr Derar on this basis and contacted him to this effect on 23 August and 6 September 2013.

[12] On this basis Recruitco assert that while Mr Derar was a person protected from unfair dismissal, the termination of Mr Derar's employment was not at its initiative so that he was not able to pursue this application.

[13] Mr Derar's evidence confirmed his version of events and his employment history. Additionally, Mr Derar provided statements from two persons with whom he worked at IGA relative to IGA's awareness of his absences and the reasons for his final absence.

[14] Mr Todd's evidence went to Recruitco's operations, his knowledge of Mr Derar's employment arrangements and the events of 21 August 2013.

[15] Ms Lewis is employed by Recruitco. Her evidence went to her discussions and attempted follow up with Mr Derar about alternative placement at the Royal Adelaide Show on 23 August 2013.

[16] Ms Preston is also employed by Recruitco. Her evidence went to her attempt to contact Mr Derar about a further employment opportunity on 6 September 2013.

Findings

[17] The question of whether Mr Derar was dismissed consistent with s.386 is fundamental to his capacity to pursue the application.

[18] I have considered the matters about which the parties are in dispute that are relevant to this jurisdictional issue.

[19] There is no dispute that Mr Derar entered into an agreement 1 with Recruitco in 2007, under which Recruitco agreed to retain him on a register for work under certain conditions and Mr Derar undertook certain obligations toward Recruitco. Notwithstanding that agreement, Mr Derar only ever worked for IGA who determined the work and working arrangements applicable to him.

[20] In terms of Mr Derar’s absences, I have noted his advice that he informed either IGA and/or Recruitco of those absences, including his absence following the birth of his child. Mr Derar has provided some documented evidence of this and, absent evidence to the contrary, I accept his position in this respect.

[21] I prefer Mr Todd’s evidence about the events of 21 August 2013. That evidence was clear and precise. It was consistent with the correspondence later sent to Mr Derar from Recruitco which confirmed the end of his assignment with IGA. Hence I am satisfied that Mr Todd did not tell Mr Derar that he was dismissed and that he did tell him that Recruitco would seek other placements for him. I am also satisfied that Mr Derar expressed his dissatisfaction, primarily at IGA and that he advised that while he was not prepared to undertake work in the immediate future, he could be contacted relative to future work options. In this respect Mr Todd's evidence was that: 2

“Mr Bourne: And during that conversation did you offer to contact Steve and see if he could speak to .. inaudible .. and get back to IGA?

Mr Todd: I did yes.

Mr Bourne: And were you aware during the course of this conversation that Mr Derar would not be available to return to any work for at least a week or so anyway?

Mr Todd: Eluding to Fitsum’s earlier text he said he’d be out for the rest of the week anyway, so ...

Mr Bourne: Right. ... And Mr Derar responded to your invitation to talk to Steve by saying what?

Mr Todd: “I didn’t want to go back to IGA now”.”

[22] That evidence is consistent with Mr Derar's absence from work because of the birth of his child.

[23] I am satisfied that, on 23 August 2013, Ms Lewis telephoned Mr Derar with an assignment opportunity at the Royal Adelaide Show. I have accepted Ms Lewis's evidence to the effect that this was a definite employment opportunity. I have also accepted that the evidence confirms that Mr Derar responded positively to this offer.

[24] Ms Lewis attempted to follow up with Mr Derar to arrange commencement details for this assignment but Mr Derar did not respond to her message. His evidence was that he was too busy and did not want that work assignment.

[25] I have also concluded that on 6 September Ms Preston left a message for Mr Derar in relation to a work assignment to commence on 9 September 2013. Mr Derar's evidence was that he didn't recall a message to that effect but that he often didn't listen to his messages.

[26] Section 386 states:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.”

[27] Mr Derar's application was made on the basis that he was an employee of Recruitco and that he was dismissed by Recruitco. The standing of employees engaged as labour hire employees has been considered in numerous matters by the Commission and by various courts. In Arcadia v Accenture Australia 3 Watson VP stated:

“An employment contract is formed by the offer and acceptance of a contract of service in which all of the essential ingredients of a valid contract are present. The contract must include consideration, the parties must have a continuing and mutual obligation to perform their respective sides of the bargain and there must be intention to create legal relations.

In a typical labour hire situation, a tripartite arrangement is made whereby an agency enters into an agreement with a worker to hire out the services of the worker to a host. In general, the absence of any contract between the worker and the host will lead to a finding that the worker is not an employee of the host. Although the concept of joint employment has some recognition in US Labour Law, it has not been adopted by any Australian Court.”

(references removed)

[28] In this matter I am satisfied that there is no question that Mr Derar was just such an employee. Mr Derar's circumstances replicate the normal arrangement described by Merkel J in Damevski v Giudice and Other: 4

“However, the present case differs in significant respects from those cases. In those cases, in general, the hiring agency interviewed and selected the workers, and determined their remuneration, without reference to the client. Usually, a client requesting a worker with particular skills was provided with one, who may or may not have been "on the books" of the hiring agency at the time the order was placed. The workers of such hiring agencies were usually meant to keep the agency informed of their availability to work, and in many cases were not to agree to undertake work for the client which had not been arranged or directed by the hiring agency. Equipment was either supplied by the worker themselves, or by the hiring agency, except for specialist safety equipment which the client often supplied. Dismissal of a worker was only able to be effected by the hiring agency. The client can only advise the hiring agency that the particular worker is no longer required by it. Had AICA/MLC acted as a labour hiring agency for Damevski to contract his services to other cleaning companies, as suggested in the chart and in the information pack, then the decisions in the above cases may have been applicable to this situation. However, that did not eventuate in the present case.”

[29] I do not consider that Mr Derar's substantial period of assignment with IGA changed his employment contract such that he was no longer an employee of Recruitco but in any event, the only issue here is whether he was an employee of Recruitco and was dismissed by Recruitco. I note that while both parties were represented in this matter little argument was put to me in these respects.

[30] The answer to those questions must be that Mr Derar was a Recruitco employee and that, upon the termination of his assignment to IGA there was an obligation under the agreement for on-hire employment signed by Mr Derar for Recruitco to consider him for work. Clause 3.7 of that agreement is particularly significant in this respect: 5

“Neither your registration with us, nor anything contained in this agreement, creates any relationship of employment. However, each time that you accept an assignment, you will be entering into a new contract of employment with us. The terms of those contracts will include the terms that apply to assignments as set out in clauses 2.2, 2.3, 3.8, 4, and 7 of this agreement together with such other terms as may be agreed at that time.”

[31] It seems clear then that under this contractual arrangement each employment assignment stands alone. It is equally clear that once an assignment concluded there was no enduring employment relationship between Mr Derar and Recruitco. No payment was made and, to the extent that there was a binding commercial relationship, this was defined by the On-Hire Agreement and cannot be regarded as an enduring employment contract. This means that, unless the termination of Mr Derar's employment is otherwise excluded by s.386, he was dismissed for the purposes of that section.

[32] Pursuant to s.386 a dismissal is not at the initiative of the employer if the employment was for a specified period of time or a specified task and was terminated when that time expired or that task was completed. In Mr Derar's circumstances he was not employed for a specified period of time. The issue then goes to whether he was employed for a specified task in terms of his assignment to IGA.

[33] The ‘On-Hire Agreement’ 6 defines an "Assignment" in the following terms:

“In this Agreement:

“assignment(s)” means placement as one of our employees to perform work for one of our clients on an on-hire basis as described in any job description that we may provide to you and as may be varied by us from time to time.”

[34] The concept of an assignment incorporates significant scope for flexibility and for the functions required of Mr Derar to be changed in a fashion inconsistent with the automatic cessation of employment once a specified task is concluded. All of this occurs effectively at the discretion of the host business. The more substantive issue is whether the assignment to IGA itself should be regarded as a specified task such that whenever a host organisation ends an assignment that has the automatic effect of terminating the employment relationship.

[35] I acknowledge at the outset that this issue has significant implications for casual labour hire employees engaged in the same manner as Mr Derar. It also has implications for labour hire employers with little or no control over the actions of a host organisation. Nevertheless it represents a matter of a character which Marshall J described in Damevski as a question of jurisdictional fact. 7

[36] In Drury v BHP Refactory Pty Ltd 8 Wilcox J referred to the concept of a specified task as it applied in relation to unfair dismissal restrictions at that time:

“Counsel argues that the Rooty Hill job was a ‘‘specified task’’ for the purposes of par (b). He is driven by the logic of that argument to say that par (b) applies whenever an employer employs a person to work on a particular project, whatever its size and duration. I do not think this is correct. The words ‘‘for a specified task’’ qualify the words ‘‘contract of employment’’. The contract of employment must be for a specified task; it must be a contract under which the employee is to carry out a specified task. The words ‘‘for a specified task’’ have nothing to do with the employer’s task, or project. This seems clear as a matter of grammar and it makes sense in policy terms. One can understand a view that the protections provided by Div 3 of Pt VIA should not be available to people who undertake only a specified task. Especially after the task is completed, it would be anomalous to restrict the employer’s right to terminate the contract of employment. Bearing in mind that many projects undertaken by employers continue for many years, while employees come and go, it would be equally anomalous to exclude relief under Pt VIA simply because the employee was engaged in connection with a particular project.”

[37] The Explanatory Memorandum addresses s.386(2)(b) in the following terms:

“1533. In relation to employment for a specified task, paragraph 386(2)(a) only applies where it was specifically intended at the start of the person‘s employment that the person‘s employment would be terminated on the completion of a specified task. It is not designed to cover persons who were simply engaged in connection with a particular task at first instance (e.g., to work on a particular project) but whose employment was intended to be ongoing.”

[38] It is clear that, almost by definition, Recruitco does not operate to manufacture, sell or produce anything in its own right. It operates to provide labour to businesses that undertake those functions. If an employee works for a labour hire company in anything other than an administrative function they cannot expect to remain employed unless they are on assignment to a host organisation. The ‘On-hire’ agreement clearly establishes that employment is limited to assignments which are themselves controlled by the host organisation.

[39] I have concluded that in this case, where the employment offer is clearly restricted to an engagement by a host organisation, that must define the specific duration of that particular employment arrangement. Accordingly, Mr Derar was engaged for a specified task. That task concluded when IGA terminated the assignment. It follows then that Mr Derar was not dismissed for the purposes of s.386 and accordingly, is not able to pursue this application. Had Mr Derar been dismissed by Recruitco whilst his assignment to IGA continued, a different conclusion relative to s.386 would have resulted. In this instance however, it was the termination of the assignment with IGA which ended the employment with Recruitco.

[40] The application will be dismissed and an Order [PR545664] to this effect will be published. Notwithstanding this, some elements of this matter cause me concern. If indeed Mr Derar did provide medical evidence to support his absences consistent with the legislative requirements and/or did provide the required advice of his absence following the birth of his child, it may be that his employment was adversely affected by parties which could extend beyond Recruitco so as to be in breach of the General Protections provisions of the FW Act. Whilst any application made under that part of the FW Act would now be outside the legislative time limit it may be appropriate for the legal representatives of the parties to discuss this concern.

Appearances:

T Bourne counsel for the applicant.

N John counsel for the respondent.

Hearing details:

2013.

Adelaide:

December 2.

 1   Exhibit R3, BT1

 2   Transcript (sound file), 2 December 2013, 12.24pm

 3   [2008] AIRC 108, paras [6] and [7]

 4 [2003] FCAFC 252, at 174

 5   Exhibit R3, BT1

 6   Exhibit R3, BT1

 7   See Damerski, paras 104 - 106

 8 1995 62 IR 467, at 471-472

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