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Recent cases and developments for liability apportionment in labour hire claims

Learn about recent cases and developments for liability apportionment in labour hire claims, and what you can do to reduce your exposure.

This webinar will help you understand:

  • General principles for determining liability apportionment
  • The labour hire employer’s contractual obligations and responsibilities
  • Is there a contract for labour hire or a contract for a “whole service”?
  • Why the labour hire employer and the host sometimes reach a private agreement on apportionment

Download a copy of the presentation slides.

View transcript

Mr Ironside: Good morning, and welcome to today's webinar.  Thank you for joining us.  Today's webinar is about the apportionment of common law claims for labour hire workers due to third party involvement.  We will delve into some case law to show how certain circumstances mean different levels of apportionment.  My name is Mike Ironside and I'm your moderator for today.  I've been with WorkCover for almost five years, and last two and a half years of that has been within the labour hire industry.

Before we get into things, here is a bit of housekeeping.  As you can see to the right of your screen there is a dialogue box. There are three main parts to this. The first part is a small red button, use this to hide and unhide the panel.  The second is your sound source selection, choose between your telephone or speakers.  Lastly there is a section in which you can write any questions you may have throughout the webinar.  Time permitting, we will allocate some time at the end to answer some of these questions. After the webinar, a recording and presentation will be available on our website, in about a week or so.  If we don’t answer all the questions, we will collect them and publish the answers on our website as well.  And if you don’t mind, please at the end can you complete a short survey.  Your feedback will help us improve our webinars and identify potential topics moving forward.  I'll now introduce our speakers today.  

Firstly we've got Robert Tidbury.  Robert is a partner at HopgoodGanim and has 20 years' experience in personal injuries litigation, including 14 years as a panel lawyer for WorkCover Queensland. Robert advises local, national and international clients in workers' compensation claims, public liability and retail claims, catastrophic injuries, general insurance matters and ADR.  His claims management profile includes a particular focus on complex, multi-party claims and labour hire.  

We also have Claire Bruggemann.  Claire is a Senior Associate at HopgoodGanim Lawyers and has over 10 years' experience in personal injuries.  Prior to joining HopgoodGanim, Claire was an in-house lawyer at WorkCover Queensland, and advised employers in the labour hire industry.  Claire's experience also includes acting for plaintiffs in a boutique plaintiff firm.  Claire regularly delivers seminars and presentations to employers and other lawyers on labour hire, OH&S, and workers' compensation related topics. Before Robert kicks things off, here is a brief look at labour hire common law claims in comparison to all industries.  As you can see, it is interesting to note that even though claims numbers have recently decreased, the costs have increased slightly.  Changes to legislation such as a 5% common law threshold can have an impact on costs and claims numbers.  The costs themselves are significantly lower than those of other industries, however that is mainly due to the apportionment of costs.  I will now hand you over to Robert.

Mr Tidbury: Good morning ladies and gentlemen.  My name is Robert Tidbury, and I am the partner for Insurance and Risk at HopgoodGanim.  I will be presenting today's seminar with Claire Bruggemann, Senior Associate at HopgoodGanim.  In today's seminar we will discuss the following matters.  The landmark case on labour hire apportionment, TNT v Christie, cases where the labour hire employer has been found greater than 25% liable, cases where the labour hire employer has been found less than 25% liable, general principles for determining liability apportionment, the labour hire employer's contractual obligations and responsibilities, the significance concerning whether there is a contract for labour hire or a contract for a whole of service and, finally, why does the labour hire and the employer sometimes reach a private agreement on labour hire apportionment.  

At law, employers owe their employees a non-delegable duty of care to ensure their employees' safety. This duty of the employer extends to ensuring that third parties to whom the employer's workers are loaned or hired out to exercise reasonable care for those workers' safety during the period of hire.  In other words, a labour hire employer cannot avoid or dispense with its duty of care owed to its employees simply because its employees are sent to work for a client. Clients of labour hire businesses, typically called the host employer, also owe the labour hire employees working for them a duty of care.  In that regard, cases such as Blackwood & Son v Skilled Engineering, a 2008 decision of the New South Wales Court of Appeal, demonstrate that the duty of care owed by a host to its labour hire workers is analogous to the duty of care which the host owes to its own employees.  A consequence of both the employer and the host owing a labour hire worker a duty of care is that at trial of proceedings involving a labour hire worker injured at the host's premises due to negligence, the court must make a decision on apportionment of the liability between the labour hire firm and its client. The landmark case for labour hire apportionment in Australia is TNT Australia v Christie.  In that case, a labour hire firm, Manpower, hired its employee out to work for a client, TNT Australia.  The worker suffered injury at the client's premises when he was operating a pallet jack which malfunctioned.  At trial, both the labour hire employer and the host were found liable, with each Defendant considered to owe the injured worker a duty of care consistent with the duty owed in an employment relationship.  This determination was upheld on appeal.  The labour hire firm was found to have breached its duty by failing to properly instruct its worker, failing to provide proper assistance, and significantly, its failure to provide, inspect, maintain appropriate equipment for its employees' use, in this instance a properly functioning and maintained pallet jack.  

Likewise the host, TNT, was found liable because it failed to properly train the worker in the safe operation of the pallet jack, and its concurrent failure to identify the defect in the pallet jack, or repair it.  Liability was apportioned by the court at 25% against the labour hire firm and 75% against the host.  The primary reasons the host employer was determined to bear a higher proportion of the liability was because it was in the most proximate or closest position to exercise supervision and control over the immediate activity giving rise to the worker's injury.  In that regard, the worker was working alongside four direct employees of TNT at the time of injury, and he was treated the same as them by TNT.  This apportionment of 25/75 in the labour hire employer's favour which was arrived at in TNT v Christie is considered to be the general yardstick or rule of thumb for determining liability apportionment.  However, since this 2003 decision, the courts have shown a preparedness to determine liability apportionment in individual cases on the basis of their own facts.  This has led to a number of well-publicised decisions being handed down by the courts where the labour hire agency's share of the liability was found to be greater than 25%.  

A prominent example is Glynn v Challenge Recruitment Australia Ltd, a 2006 decision of the New South Wales Court of Appeal.  In this case, the plaintiff was employed as a general labourer. He was sent by his labour hire employer to clean up a disused warehouse belonging to the host employer which operated a concrete demolition business.  On the date of the accident the plaintiff was working alongside two labourers and a foreman from the host employer.  At trial, the evidence revealed the warehouse was dark, as no electricity was available.  The workers attempted to raise a roller door at the premises, but they were unable to do so. The foreman then directed the plaintiff to climb a six metre ladder in order to release two metal bolts which were preventing the roller door from being raised.  In the course of scaling the ladder, which was unsecured, the plaintiff fell and sustained personal injury.  At trial, the labour hire employer was found liable for the accident on the basis that it had not properly trained or instructed the plaintiff in the safe use of ladders.  The labour hire agency appealed.  

The Court of Appeal held that both the cause of the accident and responsibility for it was multi-factorial.  In that regard, the court accepted there was a flaw in the system of work in that the ladder should have been secured, and that this was very much within the control of the host.  However, the Court of Appeal further held that the incident may not have occurred had the plaintiff received proper training and instruction from the labour hire company.  The court further observed that the labour hire employer in this instance had done nothing to respond to the risk of injury to the plaintiff and had not, by way of example, visited the work site to examine the working conditions.  As a result of these considerations, the Court of Appeal apportioned liability at 40% to the labour hire company and 60% to the host.  

Another labour hire claim involving a fall from heights, where the labour hire employer's share of the liability was determined to exceed 25%, was Victorian WorkCover Authority v Carrier Airconditioning Pty Ltd, a 2006 Victorian decision.  In that case, a forklift driver was hired out to Carrier Airconditioning Pty Ltd, the host, by Workforce on Tap, a labour hire firm.  The plaintiff worker sustained injury when he fell whilst descending a makeshift platform he had erected.  Liability was apportioned by the host at 65% - liability was apportioned by the court, rather, as 65% to the host, and 35% to the labour hire firm.  It was concluded that the host employer should bear the main responsibility because it failed to give the plaintiff any relevant instruction or warning of the task at hand, nor did the host provide suitable equipment or say anything to the plaintiff about the availability of such equipment.  However, the labour hire firm was also considered blameworthy as its efforts to inquire of the host about the safe work arrangements in place at the host workplace were limited to the labour hire firm's representative making a telephone inquiry of the host.  In particular, the labour hire employer did not undertake a site assessment, nor did it inquire as to what particular work its employee would be required to undertake, or where, or with what equipment.  The court considered that the labour hire firm should have at least insisted that the host employer give adequate instructions to its employees about the duties he was to perform and the equipment he should use in performing those duties.  The court also held that the labour hire firm should have insisted that its employee be fully inducted about the details of the host's OHS regime before he commenced work for the host.  

A Queensland precedent where the labour hire employer's share of the liability was found to be greater than 25% was the case of Van Duong v Versacold Logistics Limited, a 2010 decision of Queensland's Supreme Court. In that case, the plaintiff was operating a ride-on pallet jack at the host employer's premises when the handle of the pallet jack suddenly jerked causing the plaintiff to lose his balance and fracture his right arm.  The court held that the most likely explanation for the plaintiff losing control of the operation of the pallet jack was because the pallet jack ran over a stray piece of debris present on the floor of the premises.  In apportioning liability between the labour hire firm and the host, the court was critical of the lack of evidence from the host regarding its efforts to ensure the floor of its premises was kept free of debris.  Therefore, the court found that the system in place at the host premises was insufficient in the context of the risk posed to an operator should a pallet jack encounter debris on the floor.  The court also found that the labour hire employer should have taken more comprehensive steps to ensure that the host maintained a sufficient cleaning regime for its premises.  In contrast to the decision of TNT v Christie discussed earlier, the labour hire firm in this matter had a presence at the host site.  The court found that the labour hire firm in Van Duong v Versacold was aware of a cleaning problem.  But notwithstanding that, it failed to ensure that the host adequately dealt with it.  On this basis, liability was apportioned by the court at 30% to the labour hire firm and 70% to the host.  This decision of the court was handed down by Queensland's former Chief Justice, the Honourable Paul de Jersey, and was not the subject of an appeal.  I will now hand you over to Claire.

Ms Bruggemann: Thank you, Robert.  Now I am going to discuss some recent decisions in which the labour hire employer was not found to be liable, or was found to be liable to the extent of less than 25%.  I will be discussing nine cases, and in eight of them the labour hire employer was not found to be liable.  There is one Western Australian decision, and the remainder are from the New South Wales Supreme Court or Court of Appeal.  There are no recent Queensland decisions where the employer has been found liable to the extent of less than 25%.  The first case is Dib Group Pty Ltd trading as Hill & Co v Cole.  In that case, the plaintiff was delivering fuel to the premises of Dib.  When returning to his truck, after adjusting valves which were required to be open when the fuel was being transferred, he stepped on a cover over an inspection pit.  When he stepped on the cover it moved and he fell into the pit and sustained a complex fracture to his left ankle.  The cover of the pit was surrounded by sections of pine log raised approximately four inches above a gravel surface.  

Over time, employees of Dib had chipped away the concrete at the corners of the rim to allow the lid to be more readily lifted by applying downward pressure on one corner. The pit was required to be inspected and cleaned on a weekly basis.  The plaintiff sued Dib, who was the occupier of the premises.  He did not sue his employer, Finemore Transport.  The trial judge found that Dib was liable for the plaintiff's injuries.  His Honour held that it would not have been reasonable for the plaintiff's employer to have lifted the pit cover to see that the corners had been chipped away. Even if there had been a site inspection, it was beyond any reasonable expectation that the defect in the concrete that caused the pit cover to be unstable would have been discovered on inspection.  Dib could not establish that there was any causal relationship between any breach of duty by the employer and the plaintiff's injury.  Dib appealed to the New South Wales Court of Appeal on the issue of whether the plaintiff's employer was also liable in negligence and would, if sued by the plaintiff, have been liable for contribution to Dib.  The Court of Appeal dismissed the appeal and held that the employer's duty to adopt safe systems of work and to provide proper plant and equipment will operate differently on premises and in circumstances over which it has full control, as opposed to those which are under the control of others. The concept of control is multi-faceted. It is appropriate to ask quite specific questions as to what may be expected of any employer in such circumstances.

The duty of the plaintiff's employer included an obligation to carry out a site inspection.  The plaintiff's employer did not carry out a site inspection and therefore breached its duty of care.  However, there was no causal connection between the breach of duty and the injury because a reasonable inspection would not have disclosed the risk of injury.  Dib was held liable to the extent of 100%.  The next case is Hodge v CSR Limited.  The plaintiff was employed by Adecco, and supplied to CSR Limited to drive concrete agitator trucks.  He sustained an injury to his cervical spine from using a 25 kilogram jackhammer to remove concrete which had solidified in the agitator barrel.  He was undertaking this task over a period of approximately three hours.  De-dagging was usually performed using a Kanga jackhammer weighing approximately 10 to 11 kilograms.  However the host employer's jackhammer had been stolen and, subsequently, jackhammers were hired.  His Honour Judge Hislop held that both defendants were liable for the plaintiff's injury.  The labour hire employer was liable for breach of the non-delegable duty of care. However, His Honour held that the labour hire employer should be fully indemnified by the host employer for the following reasons.  The labour hire employer had no direct involvement in the host employer's site, it had no control over the site, it did not have a supervisor on site, they were not involved in the plaintiff's day-to-day work, they were not aware of the use of a full sized jackhammer to de-dag trucks.  

They were aware that de-dagging was carried out from time to time, and they were aware that de-dagging was performed intermittently and on dates which were not predictable.  His Honour said that had Adecco observed de-dagging being performed prior to the theft of the Kanga jackhammer, it would have observed the work being carried out using appropriate equipment and as part of a safe system of work.  The host employer was therefore held liable to the extent of 100%.  The third case is Clarence Valley Council v Macpherson.  In that case, the plaintiff was employed by APS and supplied to Clarence City Council as a spray operator to assist with eradicating weeds.  He sustained a severe twisting injury to his right wrist and a fracture of his fourth metacarpal whilst using a chainsaw with an Auger drill bit attachment.  Expert evidence was led that the chainsaw should have been fitted with an Auger with a torque-limiting clutch.  The injury would have been avoided if the chainsaw had the clutch attachment. Evidence also confirmed that the Council had a chainsaw with a clutch attached, which therefore meant that it was aware of a real risk of injury to a person who used a chainsaw without a clutch. APS argued that it did not breach its duty of care to the plaintiff in providing a safe system of work and providing safe plant and equipment because the Council provided the equipment to the plaintiff in a spur of the moment, and APS could not have prevented the provision of the unsafe chainsaw.  

The reference to 'spur of the moment' was that the system of work was to be changed from using an axe to using the chainsaw.  The change to the system of work was developed by the Council on the prior afternoon. Her Honour Judge Flannery accepted that the plaintiff was provided with the chainsaw in a spur of the moment fashion and, as a consequence, it was difficult to see how APS would or could have prevented the provision of inappropriate equipment on the morning of the incident.  However, Her Honour held that APS could not abdicate its continuing responsibilities to its employees with respect to the provision of safe plant and equipment and found APS liable to the extent of 15%.  The Court of Appeal was not prepared to overturn the 15% apportionment, as decisions on apportionment are discretionary by trial judges and there was no demonstrable error.  The next case is Shoalhaven City Council v Humphries.  The plaintiff in that case was employed by Campbell Page Labour Hire and was supplied to Shoalhaven City Council to work for an arm of the Council responsible for sewerage maintenance.  The plaintiff sustained injuries to his back and shoulder when he attempted to manually lift a manhole cover on his own that weighed between 75 and 85 kilograms.  

He used a lifting tool known as a T-bar.  The plaintiff was instructed to carry out the task by his supervisor.  At trial, His Honour Judge Levy found that Shoalhaven City Council was liable for the plaintiff's injuries due to the casual act of negligence by the plaintiff's supervisor, Mr Gillard.  Mr Gillard instructed the plaintiff to manually lift the manhole with the T-bar, rather than using the mechanical lifting device which was located on the rear of the Council truck they were using on the day of the incident.  His Honour found that the task the plaintiff was required to undertake was site specific, and given that the employer's duty of care was to take reasonable care and was not absolute, there was nothing it could have done in a practical sense to avoid the risk of injury.  The plaintiff was under the instruction and supervision of an experienced supervisor in circumstances where there were systems in place for the assessment of the risk and there was proper lifting equipment available.  The Court of Appeal held as follows:  The employer was aware, or ought to have been aware, that the plaintiff, if required to work in a confined space in a sewer main, would also be required to remove the manhole cover to the sewer main, and that such covers were often constructed of concrete and of considerable weight.  The employer should have ascertained from the Council the system of work which it had in place to enable its employees, including the plaintiff, to remove manhole covers without risk of injury. However, if the employer did make those inquiries, it would have been informed that the system of work, or the methods which the Council had available to enable covers to be lifted included the use of T-bars by one or two persons and the use of a mechanical lifting device attached to the rear of a truck.  The choice of method would depend on the circumstances and be determined by the supervisor.  Any breach on the part of the employer in failing to make the relevant inquiry was not causative of the plaintiff's injury.  It is difficult to see how the employer could be held liable for the casual act of negligence by the plaintiff's supervisor.  Therefore no apportionment of liability to the employer was appropriate.  An application by the host employer for special leave to the High Court was refused in August of 2014.  

The fifth case is Wormleaton v Thomas & Coffey Limited.  In that case the plaintiff was employed by Allstate and assigned to work at Bluescope Steel's Port Kembla Steelworks. He sustained a severe crush injury to his right leg, which was later amputated as a result of the failure of the system of work.  Thomas & Coffey was engaged by Transfield to dismantle and relocate a sinter cooler. Part of the sinter cooler needed to be lifted by crane, and Transfield engaged Allstate to undertake the crane work. The plaintiff was an dogman employed by Allstate.  His Honour Justice Campbell held that the incident occurred because of a failure in the implementation of the system of work, which would not have occurred had Transfield fulfilled its obligation to direct the work and coordinate the activities of Thomas & Coffey and Allstate.  His Honour stated that, in his view, the risk which materialised was beyond the scope of the employer/employee relationship.  He further stated that it could be said that Allstate breached its duty of care by failing to make any inquiry of Thomas & Coffey about the system it devised for lifting the frames.  But had that inquiry been made, and details of the system to be implemented explained, a reasonable employer in the position of Allstate would have been satisfied with the response.  If there had been a breach on the part of Allstate, it was not causative of the plaintiff's injury.  

The next case is Wright by his tutor Wright v Optus Administration Pty Limited.  The plaintiff suffered physical injuries to his head, and mental harm from an assault on the 15th of March 2001 when Nathaniel George attempted to murder him by throwing him off a fourth floor balcony at their place of work. The plaintiff was employed by IPA Personnel and supplied to Optus.  He was undertaking a training course when the attempted murder was committed by another worker who was employed by another labour hire agency, but was also at the premises undertaking the same training course.  In dismissing the claim against IPA, Justice Campbell held that, pursuant to contract, Optus was entitled to exercise control and direction over the plaintiff.  Optus controlled the premises.  Optus controlled the activities of others on the site for the purpose of its undertaking or business, including the employees of other agencies and its own employees.  Optus had an obligation to coordinate the activities of the employees of different employers working in its business for its purpose.  The circumstances which had arisen from Mr George's conduct were entirely within the control and management of Optus, and they were entirely unknown to IPA.  

The next case is South Sydney Junior Rugby League Club v Gazis. The plaintiff was employed by MPS as a security guard.  South Sydney Junior Rugby League Club contracted with Sermacs to provide security on site.  In order to fulfil its contract, Sermacs obtained the services of the plaintiff from MPS.  The plaintiff was injured when he attempted to move a trolley which was used to transport money from poker machines.  He lost his grip on the trolley, fell backwards and injured his back.  This was not part of his normal duties and he was not instructed nor required to move trolleys.  At trial, the Club was found 75% liable and MPS was found 25% liable. The trial judge did not consider Sermacs to be liable.  The Court of Appeal set aside the judgments against both the Club and MPS as it did not consider either of them to be liable to the plaintiff.  In relation to the plaintiff's employer, the Court of Appeal stated that MPS owed the plaintiff a non-delegable duty of care to take reasonable care to avoid exposing him to unnecessary risks of injury. MPS breached its duty of care by not taking reasonable steps to investigate the working environment in which the plaintiff worked on a semi-permanent basis.  The employer did not attend the Club at all.  However, the breach was not causative of the harm suffered by the plaintiff because any inspection undertaken by the employer would not have revealed the risk of injury.  Special leave to the High Court was refused in July of 2016.  

The next case is Kelly v Bluestone Global, which is a Western Australian Court of Appeal case.  The plaintiff was employed by Ngarda at the BHP Billiton owned Yarrie mine. He sustained neck and back injuries when the dump truck he was driving shook violently as a result of another co-worker, who was Mr Scanlan, dropping a fully loaded bucket onto the tray.  Mr Scanlan was employed by TSS, a labour hire company, and worked for Ngarda.  The plaintiff claimed that TSS was vicariously liable for the actions of Mr Scanlan.  At first instance, the plaintiff was unsuccessful.  The trial judge found that Mr Scanlan operated the excavator within the usual and accepted practice to which he was appropriately trained. Accordingly, the plaintiff failed to establish that Mr Scanlan breached its duty of care to the plaintiff.  On appeal, the plaintiff was again unsuccessful. The Court of Appeal held that control over Mr Scanlan was completely transferred to Ngarda and, accordingly, TSS could not be found vicariously liable for Mr Scanlan's negligence, if any. In relation to control, the Court of Appeal held that Ngarda provided all inductions and training, coordinated all works, conducted safety inspections and arranged transport and on-site accommodation for Mr Scanlan.  The terms of the contract between TSS and Mr Scanlan identified his obligations to submit to the directions of Ngarda.  TSS had no involvement in the day-to-day operations on-site.  There was no differentiation between Ngarda employees and TSS employees on-site.  No TSS employees were employed in a supervisory role, most workers supplied by TSS were made permanent Ngarda employees after three months and the role of TSS was confined to the paying of wages only. Rather than characterising TSS as a labour hire company, its role was more akin to that of a HR function, as the hired employees were retained by Ngarda following an initial trial period. In his dissenting judgment, Justice Mitchell stated that the burden on an employer who seeks to transfer control is a heavy one and should only be done in exceptional circumstances. Justice Mitchell stated that the burden had not been discharged by TSS in the circumstances of that case.  

The last case is Jurox Pty Ltd v Fullick.  The plaintiff was employed by Integrated and assigned to work at Jurox's factory.  She was injured when emptying a 25 kilogram bag of dextrose into a hopper.  At first instance, Judge Mahony found in favour of the plaintiff.  The evidence confirmed that the host employer's system of work for emptying the dextrose into the hopper was safe.  That system involved the 25 kilogram bags of dextrose being transported from a corridor outside the powder room and stored on pallets.  A lifter was provided which had a platform that would be lowered to the level of the pallet and the bag slid onto the platform.  The lifter would then be wheeled into the powder room and placed adjacent to the hopper.  The bag would be placed on the platform so the operator could split open the bag and its contents would empty by force of gravity into the hopper.  The plaintiff's evidence illustrated that she did not complete the task as per her training and instruction.  Rather, after placing the bag into position on the hopper, she used her right hand to grab the end of the bag, slice it open, after which some of the contents would spill out.  Thereafter she would pick up the bag to empty the remainder of the contents. The court accepted that she adopted an unsafe work practice and that work practice continued, uncorrected, until the day of her injury.  After examining the evidence led at trial, the Court of Appeal was not satisfied that Jurox had any formalised system of supervision in place and noted that there was no person whose role or responsibility it was to ensure that she understood her training and complied with that training.  In relation to whether Integrated should have been a joint tortfeasor, the Court of Appeal upheld the original decision that the claim against Integrated failed on causation grounds.  The Court of Appeal agreed that any audit of the system of work undertaken by Integrated would have revealed the safe system of work, and not a failure of the host employer's supervision.  The employer's duty did not extend to supervising the host employer's supervisory regime.  

Mr Tidbury: Thank you, Claire.  The predominant theme from the cases just discussed by Claire is that the courts, particularly in New South Wales, have demonstrated a willingness not to find the labour hire employer liable so long as any breach of duty committed by it was not causative of the incident.  A further theme apparent from the cases discussed by Claire today, is that the labour hire employer's share of the liability will often be significantly less than 25%, sometimes even nil where the evidence reveals that the cause of the labour hire worker's injury arose as a result of a sudden, unexpected departure from the host's established system of work, such that the labour hire employer was not in a position where it could reasonably intervene to protect its worker's safety.  In most instances, labour hire employers may not be found liable for injury to their employees arising from concealed or very minor defects at the host's workplace if a reasonable system of inspection would not have revealed it.  

Whilst the labour hire employer should always make appropriate inquiries of the host to ensure it has a safe system of work, absent prior knowledge of any shortcomings, the labour hire employer's duty of care does not normally extend to addressing the effectiveness of the measures put in place by the host to enforce its safe system of work.  Now beyond those considerations where the labour hire employer's share of the liability was nil, or well below 25%, an analysis of the cases discussed today revealed a number of general principles which offer guidance in determining liability apportionment between the labour hire firm and the host employer.  Those factors include what were the respective degrees of access to the premises where the incident occurred as between the labour hire employer and the host, and what was the labour hire employer's opportunity to inspect those premises?  For example, if it's the case the labour hire firm had a site office at the employer's premises, then that consideration might result in a greater share of the liability being borne by the labour hire firm.  What were the employer and the host's respective states of knowledge of the hazard?  For example, if the host was aware of a particular hazard or reoccurring issue at its premises in circumstances where it did not inform the labour hire firm of that hazard, then that state of affairs may well result in the labour hire employer bearing a share of the liability above 75%.  How long had the labour hire employee been working at the host premises?  

Did the labour hire employer have an ability independent of the host to prevent or avoid the hazard by itself or did it require the consent or approval of the host?  This is sometimes called the employer's capacity to shield the employee.  How long had the relevant hazard been in existence at the host premises?  Had any prior injury or incidents arisen from the same hazard there?  Was the particular hazard at the host premises a one-off event, or a constant occurrence?  Was the employee injured in the course of his or her duties, normal duties, or did those duties being performed at the time of the incident differ to what was usual for that employee to perform at the host premises?  For example, if a host employer required a labour hire worker to perform duties at its premises which materially differed to the position description supplied to the labour hire firm at the time of the worker's placement, then that state of affairs may result in the host bearing a portion of the liability above 75%.  Was there any significant difference in the employee's ability to draw the hazard to the attention of the host, as compared to his or her employer?  For example, labour hire workers placed at a host's remote area worksite where there is a lack of mobile coverage, means that the labour hire employer may not be readily or immediately contactable in contrast to the host.  

Who was responsible for the labour hire worker's training and instruction?  Was the non-delegable duty owed by the employer one that could be discharged in circumstances by simply doing nothing at all, such as a case where a casual or unforeseeable act of negligence on the part of the host employer gives rise to the worker's injury?  What were the respective roles played by the employer and the host in devising, instituting and maintaining the system of work that was found to be unsafe? Which party was in control of the premises?  Which party supplied any plant or equipment to the employee required for use in carrying out the work at the time of injury?  In its determination of liability apportionment in a labour hire matter, the court will typically have regard to the documented agreement or contract entered into between the labour hire firm and its client.  Often, agreements of this type may set out the various responsibilities and obligations of the labour hire firm and the host in relation to the matters relevant to the labour hire worker's safety, such as which party is responsible for induction training and supervision of the worker.  The agreement may also deal with rudimentary matters, such as which party should the labour hire worker approach in first instance if he or she encounters a hazard or problem with their duties.  It may also deal with which party is responsible for maintaining and repairing damaged plant and equipment.  

The existence of these types of contractual provisions may have a significant outcome on the liability apportionment, and therefore labour hire firms need to be mindful that they could potentially increase their exposure to liability if they agree to be contractually responsible for matters which are typically within the host employer's sphere of control, such as day-to-day supervision of the worker's duties at the host premises, or being responsible for training the worker in the intricacies of the host's system of work, plant and equipment.  Labour hire employers should ensure they are fully aware of the extent of their contractual obligations, and also their client's contractual obligations when it comes to hiring out their workers and, if any doubts arise, labour hire firms are well advised to seek legal advice promptly. Labour hire companies also need to be mindful of the nature of the service they are contracting to provide for their clients.  In other words, is the labour hire firm entering into a contract with its client to provide labour hire services or, alternatively, is the labour hire firm contracting to provide additional services to its clients above and beyond the provision of labour hire, such that a contract between subcontractor and principal may arise?

This was the scenario for consideration in Unilever Australia Limited v Pahi, a 2010 decision of the New South Wales Court of Appeal.  In this case, the injured worker was employed by a labour hire agency ESP Tecforce.  He was sent to work as a packer at Swire Cold Storage.  That company had contracted with Streets Ice Cream to repackage some of its products. The worker developed carpal tunnel syndrome whilst working on a production line at Swire's premises. Now, under the agreement entered into between ESP and Swire, a portion of the cold room at Swire's premises was specifically designated for ESP workers to carry out their duties.  In addition, ESP employed its own project manager who was based on site at Swire's premises on a full-time basis.  In first instance, the trial judge found each of the defendants, Streets, Swire and ESP negligent, and liability was apportioned equally between them.  On appeal, the decision of the trial judge on liability was reversed, and the Court of Appeal found that neither Streets, nor Swire had breached their duty of care to the injured worker.  In arriving at its findings, the Court of Appeal observed, first, having engaged a competent contractor in ESP, Swire was not obliged to provide or supervise a safe system of work to ESP or its employees.  Secondly, ESP designed the system of work and retained supervisory control over its daily implementation.  

By contrast, Swire gave no instructions to ESP's employees as to how the work was to be carried out. Having regard to the above considerations, the court determined that the worker's employer here, ESP, should be entirely responsible for the worker's injuries because it provided a whole service to Swire, rather than simply the supply of labour.  It's quite clear from the wide ranging authorities discussed today that the law surrounding liability apportionment is often complex, and the ultimate findings on the respective culpabilities of the labour hire company and the host may well be influenced by how those parties' evidence unfolds at trial. For this reason, to give greater certainty, and also to minimise unnecessary costs, it is common for the workers' compensation insurer to the labour hire employer to negotiate a private agreement on liability apportionment with the host ahead of trials.

This happened in the case of Thomas v Trades & Labour Hire Pty Ltd & Anor, a 2015 decision of Queensland's Supreme Court. HopgoodGanim's Insurance and Risk group acting for WorkCover and the labour hire employer, were successful in defending liability in this case.  The case is currently the subject of an appeal.  In brief, the plaintiff suffered a personal injury when a truck's tailgate gave way and fell onto his foot.  In finding for both defendants, the court observed that the plaintiff was – that the manner in which – the court found that the plaintiff was well-aware that the manner in which the plaintiff operated the truck's tailgate caused its hinge to break.  The court also found that the plaintiff was aware that he should have stayed well-clear of the broken tailgate but, instead, he approached it and pushed it, resulting in the injury.  Therefore any breach of the labour hire employer's duty in relation to the provision of a reasonable system of work was not causative of the injury.  In finding for both the labour hire employer and host in this case, there was no requirement for the judge to arrive at any formal decision on liability apportionment because a private agreement on those matters had already been entered into between WorkCover and the host.

In addition to enabling the defendants to work more closely together in defeating the plaintiff's claim, considerable savings in costs and resources were achieved by virtue of there being a significant reduction of the number of issues in dispute for consideration by the court, and a commensurate reduction in the trial's duration.  Put simply, if the labour hire company and the host can privately agree on liability apportionment well ahead of trial, then they are often able to focus their fire on the plaintiff's case by sharing intelligence and resources so that they are better able to defend or refute various aspects of the plaintiff's case.  Privately negotiating liability apportionment, where possible, also enables the labour hire employer and the host to limit or curb their exposure, as well as avoiding the publicity which would otherwise be generated by the court handing down a decision on liability apportionment as part of its public judgment.   That ends the formal part of today's webinar.  Both Claire and myself would welcome any questions from members of the audience.

Mr Ironside: All right, thank you very much for that, Rob.  Okay, so we do have a couple of questions we will go through.  Rob, the first one is for you, if you could answer this for us please, and the question is, “For a long term labour hire assignment, how regularly should site inspections be carried out?

Mr Tidbury: That's a great question Michael.  As a general rule of thumb, site inspections should be carried out at least yearly if not six monthly, or whenever there is a substantial change to the host's premises, their system of work, or the duties the labour hire worker is required to perform.  Now, it's important that these inspections are always contemporaneously documented and completed and any issues or requisitions identified in the inspection should be followed up and attended to.  Now if there's a significant issue identified in an inspection, or if a reoccurring issue is occurring, is happening at the host's worksite, then that state of affairs may well warrant more regular inspections of the site to be carried out to ensure that the issue has been properly addressed and rectified.  Thank you.

Mr Ironside: Fantastic, thanks for that.  Claire, I'll get you to answer question two if you don’t mind.  The question is, “What should labour hire employers do if they employ a worker who discloses a medical condition or injury during the recruitment process?

Ms Bruggemann: Thanks Michael.  As soon as a labour hire employer is aware of an injury or condition that may impact on a potential candidate's ability to safely perform work duties, the duty of care at law is higher with respect to Workplace Health and Safety.  The labour hire employer should immediately notify the host employer of the candidate's limitations.  They should ensure that the host employer's system of work enables the candidate to safely undertake their work duties.  So, for example, they might require additional assistance from co-workers, or additional safety aids, or a change to the system of work might be required. It's important though that it can be arguable if the labour hire employer is aware of a pre-existing medical condition or injury and does not disclose that to the host employer, then the labour hire employer could bear a greater portion of the liability.  So it could go over that 25% mark.

Mr Ironside: Excellent.  Thank you. I think what we'll do is we'll have one more question and, Rob, I'll go back to you.  “Would it make any difference to apportionment if the labour hire employee was injured at the host employer's premises due to the negligent acts of another labour hire employee?”

Mr Tidbury: That's a very interesting question, Michael, and it's one that we do occasionally see from time to time.  So does it make any difference to apportionment if the labour hire worker is injured at the host premises due to negligence by another labour hire employee employed by the same firm?  Well, we would argue that it potentially may not make a difference. If the host employer is responsible for the premises, they provide the equipment involved in the incident, they created the relevant work systems relevant to the incident, they exercise control, if they were responsible for training the negligent labour hire employee then we would say that the host employer should still be found liable to a greater extent than the labour hire employer.  I'm aware of at least one case handed down by the courts in the last five years where this type of scenario has occurred, Michael, and that was Pang v P&M Quality Smallgoods.  Now, in that case a labour hire employee was injured when she was struck from behind with a heavily loaded trolley being pushed by another labour hire employee who was employed by the same labour hire firm. Because the host employer was responsible for the premises, provided the equipment involved and trained both employees, the court found that the host employer was still ultimately very much in charge of the system of work and in a position to readily exercise control over the state of affairs surrounding the accident.  For these types of considerations, liability was apportioned 90% against the host and 10% against the labour hire employer.

Mr Ironside: Fantastic.  Thanks, Rob. Now, there's been a few questions that have just come through recently, but what we're going to do is we'll get those questions ready for the presentation when we put in on the website in about a week's time or so, so each of the questions that have been asked today we will have the answers to those.  I would like to thank both Robert and Claire for presenting today.  Thank you all for coming along and I hope you took something out of it.  Thank you very much and have a great day.

Questions and answers

There were 3 questions and answers at the end of the webinar. Answers to the questions we didn't have time to answer during the webinar are listed below.

We on-hire doctors in remote areas of Australia. We have one office located in Sydney. How important is it that physical site inspections are conducted? Is there another way to do a site inspection besides physically attending ie. Photos, checklist?

It is highly desirable to physically conduct site inspections to ensure that your employees are working in a safe environment but there are occasions when this may not be possible. In those circumstances we would recommend that an inspection be undertaken by way of Skype. The host employer could connect to Skype on an IPad or laptop and physically show the labour hire company around the site. It is essential a thorough inspection is performed. A checklist would also be of assistance to ensure that all areas of the site have been considered.

Why is it that in Qld the 75/25 apportionment is not ever reduced for labour hire companies? I have seen on many occasions that 75/25 is accepted by the clients?

The 75/25 apportionment is usually the starting point for assessing apportionment between labour hire companies and host employers. However, the specific factual circumstances of each claim are relevant in determining apportionment.

Very few labour hire claims have proceeded to judgment in Queensland in the past several years. However, there has been no shortage of circumstances where WorkCover Queensland has negotiated private settlement agreements where the contribution from the labour hire employer has been less than 25

Two examples of specific circumstances which would permit an agreement to contribute less than 25% include:

  • Host employer has changed the duties of the claimant without notifying the labour hire employer (asked the claimant to perform dogman duties when he was engaged as a general labourer and not qualified to work as a dogman)
  • Host employer has changed the system of work without advising the labour hire employer
What advice would you give to labour hire organisations who are sending staff to perform personal care to individuals within their homes? (home or aged care)

Risk of injury to care workers working in the client’s home frequently arise from:

  • The physical surroundings;
  • Manual handling of the client;
  • Risk of assault by the client;
  • Feeling unsupported when working alone in a difficult environment or with a difficult client.

The first two risks can usually be dealt with by undertaking thorough risk assessments and installing appropriate equipment/making appropriate modifications to the workplace. Make it clear that it is the responsibility of the host employer to ensure the risk assessment is completed prior to placement. Labour hire companies should also ensure that their workers are properly trained with respect to those risks. For example, if a worker is required to use a hoist at a person’s home– has that training been provided before the worker was sent to the home? We would also recommend that the company look into how the care provider alerts the workers to any risks identified by the host (and control measures) prior to sending them to the premises.

The risk of assault by the client will require a thorough risk assessment in order to determine the best control measures to put in place. These may include physical control measures such as a lockable room or duress alarm. It is likely the worker will also require specific training in how to deal with an aggressive client and what to do in the aftermath of an incident of aggression. On-call managers should also receive training in how to deal with the aftermath of an incident of aggression so as to best support the worker involved.

The final risk relates to communication within the business and the responsiveness of the business to complaints raised by a worker. There should be a formal system in place for workers to raise concerns and a formal method of investigating and responding to those concerns in a timely manner.

The Queensland Government’s “Guide to working safely in peoples home” may be a useful resource. This guide has been produced by the Queensland Government to provide practical advice to employers who send workers to other people’s homes on managing workplace health and safety. It includes some advice as to managing various issues including aggressive behaviours, manual tasks (such as cleaning duties) and biological hazards. There is also a document produced by the Queensland Government entitled “When community workers come to your home” which may also be a useful resource.

If a labour hire company has a client with unsafe (slippery) flooring – how can they minimise their risk/liability other than refusing to send their staff until they fix it? Keeping in mind Council are meant to supervise these items?

We highly recommend the labour hire employer insist that the host employer implement a formal documented regime for monitoring the inspection and cleaning of the floor surfaces.  If the state of the flooring at the host’s premises is such that it presents a significant risk of injury, even with periodic inspections of the floor, then the only viable alternative would be for the parties to reach an agreement for the host to segregate or isolate the labour hire employees from working in areas where the floor is deficient.  In such circumstances, formal instructions should be given to the labour hire workers by their employer not to enter or traverse those areas.  Should that measure not be possible then it is ultimately a commercial decision for the labour hire firm as to whether they continue to hire workers out to that particular client.

It is important to bear in mind that an employer will not discharge its duty of care by merely asking a client/host employer to repair or replace unsafe flooring – the actual repairs or replacement must be undertaken.

The labour hire employer should ensure that subsequent inspections include a check of the flooring of the host employer’s premises.  All employees of the labour hire employer should be instructed to wear appropriate safety footwear with adequate tread.

Training should be provided to employees to keep a proper lookout as they go about their duties and to bring any issues associated with the cleaning and inspection of the floors to the immediate attention to both the labour hire employer and also the host employer.

Last updated
01 December 2016

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