A recent Fair Work Commission (“FWC”) decision found that reinstatement was an appropriate remedy notwithstanding the labour hire company’s contention that it lacked contractual power to reinstate the employee to his former position with its client.

Facts of the case

The employee was employed by a labour hire company which provided maintenance services. On 21 April 2020 there was an incident where the employee breached safety rules by failing to isolate a palletising machine. An investigation was conducted and recommended that he be issued with a final written warning. Instead, the labour hire company summarily dismissed the employee for his failure to comply with the host’s Lifesaver Rules, OHS requirements and for his willful disregard for a lawful direction. The employee claimed he had been unfairly dismissed and sought reinstatement.

Unfair dismissal

The FWC found that the employee’s dismissal was harsh, unjust and unreasonable. It found that his actions did not constitute serious misconduct. The decision to dismiss took into account performance and conduct matters which had not been put to the employee. The FWC found that the decision to dismiss did not adequately take into account the contributing factors, such as the fact that the employee should not have been left on his own to manage a machine which he was not adequately trained on. In addition, the employee was not afforded an opportunity to provide a response to the labour hire company’s proposal to dismiss and was merely informed by phone and then email that he had been dismissed with immediate effect.

Reinstatement an appropriate remedy

The labour hire company argued that it would be inappropriate to reinstate the employee because:

• the necessary trust and confidence had been lost;
• there was a history of poor work performance;
• it lacked the contractual power to compel its client to reinstate; and
• the applicant would not have difficulty finding work as he has had many previous employers.

The FWC was unpersuaded by these arguments. The contract between the labour hire company and its client was not put in evidence and so a contractual obligation could not be inferred. Further, the FWC did not agree that there had been a mutual loss of trust and confidence which would make reinstatement inappropriate. The FWC exercised its discretion to reduce back pay by 15% taking into account the employee’s conduct which led to his dismissal.

A case where reinstatement was not an appropriate remedy

In contrast, in this matter of the Full Bench of the FWC which found that reinstatement was not an appropriate remedy. The employee had been unfairly dismissed for refusing to comply with his employer’s attendance policy when it introduced fingerprint scanners to sign on and off for work at one of their sites. It was found, in an earlier decision, that the employer could not lawfully direct the employee to undergo fingerprint scanning. The employee was awarded the maximum compensation payment. He appealed this decision on the basis that reinstatement was an appropriate remedy. He argued that prior to his dismissal, his employment record was unblemished.

However, the Full Bench was not satisfied that a workable employment relationship could be re-established. Throughout the proceedings the employee made “unsupported allegations of theft, coercion and illegal behaviour” on the part of the employer and its Managing Director.  This lack of trust was further evidenced by the employee’s refusal to accept an unconditional without prejudice payment of $25,000 made by the employer in response to the employee’s earlier submissions about his loss of income. The conclusion reached was that a relationship of trust and confidence could not be restored.

Takeaways

• The FWC must determine if reinstatement is appropriate before considering any other remedy in the case of an unfair dismissal.
• It is not until the FWC is satisfied that reinstatement is inappropriate that compensation can be considered.
• It is important that managers give clear evidence on the breakdown of the trust relationship during unfair dismissal proceedings in order to reduce the risk of an order of reinstatement.

Update: Although not a party to the original decision, the host was granted permission to appeal and in doing so put a copy of the labour hire contract into evidence. The contract established the right of the host to require the labour hire company to remove the worker, and the obligation on the labour hire company to do so. With the benefit of the contract, the Full Bench of the Commission quashed the order for reinstatement to the host’s site. See our updated blog here. 

People & Culture Strategies