Labour Hire Agencies and Liability

workers compensation: The Multi-Factor Test For Employees And Contractors


Contact your local team for a free consultation to find out if you are eligible for compensation

When looking at the Law of Employment, it is a firm principle that an employer is responsible for the well-being of their employees, and are vicariously liable for their actions, and providing a safe place for them to work. The reason for this surrounds the nature of the employer/employee relationship, with the employer displaying a degree of control over their employees.

Although this is the general case in most employer/employee relationships, the concept has become complicated with the introduction of labour hire agencies. Due to the introduction of these agencies, it has become more difficult to distinguish who is liable when an employee gets injured at work.

The difficulties presented to the law in this situation is the fact that labour hire agencies are often the businesses forming the contract of employment with the worker, while host businesses are controlling their day to day workload. Due to this, it is difficult to establish who has “control” of the employee, as required in the employer/employee relationship.

In response to this, Australian authorities have emphasised the concept of “ultimate control”, such as right to discipline and dismissal retained by the labour hire agency.

This concept is emphasised in the case of Swift Placements Pty Ltd v WorkCover. In this case the court emphasised the point and stated that:

rather in the sense of the ultimate or legal control over the person to require him to properly and effectively exercise his skill in the performance of the work allocated in default of which disciplinary measures may be adopted, including the final step of dismissal

This is so, even in cases where a person is to work under the direction of the host business as explained in Deautz Australia Pty Ltd v Skilled Engineering Ltd:

“the fact that the worker worked under the direction of the client at the worksite did not alter his status as an employee of Skilled Engineering

As a result of the labour hire agency being considered the employer, liability has then been placed upon the agency to provide a safe system, safe plant and equipment or place of work. If they fail in this regard, the agency can be liable under WHS legislation and Workers Compensation legislation.

If you are a labour hire agency worker that has been injured during the course of your employment, you may be entitled to compensation. For more information, please call Stacks Goudkamp on 1800 251 800 to arrange a free, no-obligation assessment of your workers compensation claim, or alternatively, make an online enquiry.



I could write a book as to how the last 4 years would have been different if not for Tom and his team.
The support, assistance, advice from the first conversation till even after the settlement was second to none from the team at Stacks Goudkamp.
Four years on and after many downs, my children and I have our lives back.
We are unable to THANK YOU enough, but know that you have changed our lives for the better in so many ways since the accident.