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Labour hire workers have legal rights

If injured, labour hire workers retain significant legal rights to workers compensation for injury, as well as employment protections.

In this blog, I explain what a labour hire worker needs to know about their legal rights.

I address two major areas:

  • making a compensation claim for injury, and
  • employment rights including unfair dismissal.

How labour hire works

Employees increasingly find themselves in insecure work, including under labour hire agreements, as more companies replace their workforces with hire-in personnel from labour hire agencies or independent contractors. Independent contractors are self-employed and work for businesses under a contract for their services.

The business for which an independent contractor works is referred to as their ‘principal‘. Labour hire agencies engage workers and then hire them out to a business to perform work for that business. The business where the worker actually performs work is often referred to as the ‘host‘. Most labour hire workers are casual employees.

The attraction of labour hire for host employers is that the risk or responsibility for guaranteeing continuing work to their staff is diminished, and sometimes completely avoided. The effect of this business strategy, however, is an erosion of the level of legal protection afforded to the worker.

Generally, labour hire workers are legally employed by the labour hire agency and not the host, even though their “boss” or the person they report to works at the host. It is usually the labour hire agency that pays the wages and has the legal contract of employment with the worker. The worker is then hired out to the host under a contract between the agency and the host, and the worker is not a party to that contract.

This three-way relationship between the parties can make it confusing when working out who is responsible for work conditions and entitlements, or who is responsible if the worker is injured at work, dismissed or suffers discrimination. Unfortunately, the answer isn’t simple; it depends on the particular circumstances.

Labour hire workers are most vulnerable when their host cuts back on the hours worked, or eliminates them entirely. To workers this can feel like being sacked, when in fact there has been no dismissal because the worker remains legally employed by the labour hire agency. This may be the case even if the labour hire agency offers the worker no other work. Your rights depend on the particular circumstances and you are encouraged to get advice as soon as possible if your host or labour hire agency stops giving you work, because strict time limits can apply if you want to take action.

Labour hire workers injured on the job

In Victoria, labour hire workers have identical WorkCover rights to permanent workers. Full stop.

So, if you are a labour worker and you are injured, WorkCover Authority Victoria covers your medical and other expenses related to your injury. You are also entitled to the identical income payments as apply to permanent employees. There are no second-class workers compensation employees in Victoria.

With whom do you lodge your WorkCover injury claim?

This is where it can become confusing.

The injured worker are advised to lodge the claim with the principal employer, not the host.

Workers need to retain a copy of the claim form submitted, aside from the signed copy they are supposed to receive from the principal employer.

Here is a summary of your injury compensation rights:

  • All labour hire workers are covered for medical bills and income payments;
  • If injury prevents a labour hire worker from returning to work, replacement income is available through WorkCover;
  • It’s easy to calculate your WorkCover benefits as a labour hire worker, as they are identical to those of permanent workers and casuals
  • It is illegal to sack a labour hire worker for lodging a WorkCover injury claim.

Many labour hire workers are unaware of their rights to WorkCover benefits, or they are reluctant to claim them. Labour hire employees rightly feel more vulnerable. But, Victorian compensation law is on your side if you are a labour hire worker. You have the exact same legal rights as a permanent employee.

If an employer intimidates a labour hire worker against registering an injury in the company injury book, it is illegal and the WorkCover Authority should be alerted.

Unfair dismissal

Labour hire workers can be protected from unfair dismissal if they:

  • are employed on a regular and systematic basis, and can expect to continue to be employed on that basis, and
  • have been employed for at least 6 months (if their employer has 15 or more employees) or 1 year (if their employer has less than 15 employees).

Employees only have 21 days from when they are dismissed to make an unfair dismissal application.

It is difficult for a labour hire worker to succeed in an unfair dismissal application. A labour hire worker who is no longer offered shifts by the host may continue to be legally employed by his or her labour hire agency so that there is no actual dismissal. However, if the labour hire agency does not offer the worker shifts elsewhere, it may constitute a dismissal. If a labour hire worker’s host or labour hire agency reduces the amount of work he or she is being offered, it is important to seek legal advice as soon as possible because it may be arguable that there has been a dismissal.

General Protections and Anti-Discrimination

Labour hire workers and contractors may be protected from being dismissed for unlawful reasons. Workers cannot be dismissed because they have exercised a workplace right, which could for example be an employee’s enquiry about unpaid carer’s leave or some other employment condition.

A worker cannot be dismissed on the basis of race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin. Equally, an employee cannot be sacked for being temporarily absent from work because of illness or injury.

These safeguards not only protect employees against dismissal for an unlawful reason, but also protect workers (including independent contractors and labour hire workers) against other types of ‘adverse action’ because of an unlawful reason. Those found in breach of general protections and discrimination provisions can face stiff penalties.

As with unfair dismissal applications, general protections applications and discrimination claims can be particularly difficult for labour hire workers. If you believe you’ve been dismissed for an unlawful reason you should seek advice as soon as possible. Workers only have 21 days within which to make a general protections application, and generally only 12 months within which to make a discrimination claim under State or Federal laws.


WorkCover rights:

Employment rights: