An Important Precedent Concerning Dual Liability for Labour Hire

1 December 2017

Background

This 2009 case concerns a labour hire company, host employer, and employee engaged as a labourer. Mr Christopher Papadopoulos (Worker) sustained an injury to his lower back during the course of his employment with labour hire company, MC Labour Hire Service Pty Ltd (Employer). The Worker took time off work for surgery and recovery. His Employer did not follow proper procedures in reporting the injury, however, and chose not to refer his Workcover claim to the Insurer despite requirements to do so, pursuant to the provisions of the Accident Compensation Act 1985 (Vic) (the Act).

Upon his return to work, the Employer sent the Worker to host employer Concept Hire Limited (Host) to work as a labourer without disclosing his previous injuries. The Worker then suffered a further and more significant back injury on 10 May 2001 which forced him to cease work. He successfully sued both the Employer and Host, with the Employer’s interest being insured by Workcover, who also pursued recovery of their compensation awarded to the Worker under Section 138 of the Act.

Decision

The Employer and Host were held duly liable. Significantly, the judge held the defendants were 50/50 liable; the usual range for the liability of labour hire companies was 10 – 15%.

The judge found that the Employer had breached its occupational health and safety obligations to the Worker by failing to ensure his safety by way of implementing procedures to ensure he did not injure himself further. Similarly, the Host was liable for failing to provide a safe working environment, given it was responsible for supplying the materials, equipment and overall system of work.

Additionally, the Host had offered to pay the Employer 50.01% toward settlement some months before the decision was made. As a result, the Employer was ordered to pay the party/party costs, calculated from the date of offer.

Lessons Learned

This case reinforced an important set of principles and rules that both labour hire companies and host employers should consider when dealing with employees or contractors.

Courts have since reinforced the importance of labour – hire companies ensuring the safety of their employees, even where they are not in direct control of the working environment. This means that such companies are often deemed to hold dual liability with host employers. This has been as true for building and construction companies as it has been for food manufacturers.

On the other hand, host employers must take all steps necessary to ensure that full training is provided and adequate safety measures are adhered to. Host employers will have an obligation to ensure not only that training is provided, but the workers properly understand all safety measures and standard procedures. This can mean having to provide training in multiple languages where foreign workers are concerned, and host employers must devise and maintain safe systems of work.

For all parties to a dispute, this remains a reminder of the significance that a well drafted offer of compromise can ultimately hold, not just for the purpose of deciding costs, but also for the wider determination of a matter.

Hentys are experts in navigating the complex areas of workers compensation, health & safety and employment law. Please contact our team for any such assistance you require.

Papadopoulos v Mc Labour Hire Services