1
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.
[2013] FWC 9791
DECISION
E AUSTRALIA FairWork Commission
[2013] FWC 9791
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[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.
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[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 agreement1 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?
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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;
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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 Australia3 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
[2013] FWC 9791
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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
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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 Ltd8 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
[2013] FWC 9791
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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.
Printed by authority of the Commonwealth Government Printer
Price code C, PR545663
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
OF FAIR WORK GOHIS 1 AUSTRALIA THE SEAL SENIOR DEPUTY PRESIDENT
