Strict Liability for Labour Hirers

Management Liability
June 1, 2011
Unfair Dismissal – One
June 1, 2011

Strict Liability for Labour Hirers

The New South Wales Court of Appeal has recently handed down the decision of Galea vBagtrans Pty Limited & Ors which will have a substantial impact on damages claims which arise as a consequence of an injury to a labour hire employee whist working for a host.

In the recent decision of Unilever v Swire the Court of Appeal found 100% liability on the part of the labour hirer where a labour hire company provided a “whole service” rather than simply supply labour, a significant shift in the way that the Courts approached the liability of a labour hirer for its employees.

The recent decision of Galea continues the shift.

John Galea was employed by Adecco Industrial Pty Limited (“Adecco”) a labour hire company. Galea was lent on hire as a truck driver to Bagtrans Pty Limited (“Bagtrans”). From late 2003 Galea would, during the course of his employment, drive a Mack truck owned by Bagtrans from Sydney to Tarcutta.

The seat in the Mack truck caused Galea discomfort when driving and in about November 2003 Galea complained about the seat to Roy and Pat, employees of Bagtrans.

Roy directed Galea to make a complaint in the defect book about the truck. On 13 May 2004, Galea was told by Pat to drive a truck to Tarcutta and exchange it for a Mack truck that was to be brought back to Blacktown. Galea asked Pat which Mack truck it was and was advised by Pat it was the same truck. Galea asked Pat if the seat had been fixed and Pat advised that it had been.

Galea drove to Tarcutta and collected the Mack Truck at 2:00am on 14 May 2004. Between 3:00am and 5:00am on 14 May 2004, Galea drove the truck from Tarcutta to Yass and a defect in the truck’s seat caused Galea discomfort whilst driving. Galea had driven around 60 to 70 kilometres when he came to 5 or 10 kilometres of road with potholes. On three occasions Galea felt a significant jolt and also heard his neck crack. Galea contacted Bagtrans from Yass and refused to drive the truck the rest of the way home.

The Mack truck was fitted with a new driver’s seat after being brought back to Sydney.

At trial, the trial judge found neither Bagtrans nor Adecco liable. The CTP insurer of Bagtrans, Allianz Australia Insurance Limited, was on its own application joined as third defendant to Galea’s claim and Allianz also achieved a verdict in its favour.

Galea appealed.

The appeal was successful. The Court of Appeal found that Bagtrans breached its duty of care owed to Galea in failing to correct the defective seat and in giving Galea the incorrect information that the seat had been fixed.

The Court of Appeal then went on to consider the liability of Adecco and the apportionment of liability between Bagtrans and Adecco.

Significantly, the Court of Appeal noted that an employer has a non-delegable duty to exercise reasonable care to provide employees with a safe place of work, a safe system of work and safe plant and equipment. This duty extends to maintenance and repair of plant and equipment.

The Court also held that where an employer entrusts another with a task of providing the employee with the place and/or system of work, and/or with plant and equipment, the employer will generally be vicariously liable for failure by the other person to exercise reasonable care in those matters.

In this case, where as a consequence of the negligence of Bagtrans the seat had not been properly repaired, Adecco was vicariously liable for the negligence of Bagtrans in failing to have the seat repaired. The Court of Appeal also found Adecco was vicariously liable for the act of negligence by Bagtrans when Pat had failed to provide the correct information, as the provision of information concerning safety of equipment is part of the task of providing a safe place and system of work and safe plant and equipment.

Justice Hodgson in the leading judgment stated:

“An employer has a non-delegable duty to exercise reasonable care to provide employees with a safe place of work, a safe system of work and safe plant and equipment. Where an employer entrusts another with the task of providing the

employee with the place and/or system of work, and/or with plant and equipment, the employer will generally be vicariously liable for failure by that other person to exercise reasonable care in those matters.”

Perhaps even more significantly, President Allsop with whom Justice McFarlane agreed held that the non-delegability of an employer’s duty means the employer is liable for any breach of duty and the non-delegable duty involves the imposition of strict liability upon the employer.

In this case Adecco’s non-delegable duty was breached if Bagtrans failed to exercise care in the provision of safe a place of work, system of work and safe plant and equipment.

The concept of strict liability is a tough pill for labour hirers to swallow.

There was however some good news for the labour hire company and the labour hire industry in general. Traditionally, following decisions such as TNT v Christie, the liability for injury to an employee lent on hire has been apportioned between the host and the labour hirer with the labour hirer picking up 20% to 25% of the responsibility.

The Courts have accepted each case turns on its own facts as does any apportionment of liability between the host and the labour hirer however generally liability would be allocated to the labour hirer at 20% to 25%. In this case the Court of Appeal found that liability should be apportioned 85% to Bagtrans and 15% to Adecco.

This will no doubt result in a push back from workers compensation insurers claiming that their liability for an injury to a worker lent on hire is only 15%.

The Galea decision will bring about a completely different approach by the Courts when assessing the apportionment of liability between a labour hire company and the host employer. Of course, it is correct to say that each case must be examined on its facts. However labour hirers are likely to be found to be vicariously liable for the hosts acts or omissions.

If the host provides an unsafe system of work or unsafe plant and equipment the quid pro quo will be vicarious liability for the labour hirer for that failure.

No doubt Galea’s case will be frequently cited by employers seeking to maximise the liability of the host and claimant’s who are eager to minimise the liability of employers due to the work injury damages scheme. Some may say the case will work to reduce the labour hirer’s potential liability and increase the burden for the host and its public liability insurer.

Others will say the case has introduced concepts of “strict liability” and “vicarious liability for the acts and omissions of the host”.

There have been two significant decisions handed down by the Court of Appeal in the latter half of 2010 relating to liability for injury sustained by workers employed by labour hirers. In the Unilever decision, the Court of Appeal found that where the labour hirer was providing a “whole service” it was 100% liable for the injury.

In this case, in a departure from traditional approach of apportioning liability to a labour hire company in the vicinity of 20% to 25% the Court of Appeal has apportioned liability at 15%.

The use of the labour hire model continues to be popular in Australia and it will be interesting to see how the law develops further.

No doubt the concepts of ““strict liability” and “vicarious liability for the acts and omissions of the host” are sure to raise concerns for business operating the labour hire industry.

Source : Barry Nilsson Lawyers – www.bnlaw.com.au

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