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HG Alert: Labour Hire Agency Not Liable for Worker’s Injury Claim - 22 Mar 2010

A recent decision in the Supreme Court of New South Wales will have a significant effect on the way liability is apportioned between labour hire agencies and host employers when a hired labourer is injured on the host employer’s premises.

In the case of Hodge v CSR Limited, Justice Hislop found that Adecco, the labour hire agency that directly employed the worker, was fully indemnified by CSR, the host employer that had engaged the agency to provide hire labour.

This case is a reminder that host employers need to make sure they have adequate public liability coverage if they use labour hire agencies.

The facts of this case

The plaintiff in this case was an employee of Adecco, a labour hire agency that had hired out the employee’s services to CSR.

CSR directed the plaintiff to remove solidified concrete from a concrete barrel, which was attached to a vehicle (known as “de-dagging”). To carry out this task, the plaintiff had to stand with a heavy full-sized jackhammer above his head for an extended period of time. While undertaking this task, the plaintiff developed pain in his neck and left shoulder, and was later diagnosed with a prolapsed disc and a compressed nerve root.

While the plaintiff sued both Adecco and CSR, both companies denied liability and attempted to cross-claim and seek indemnity from each other.

Apportionment of liability

The Court found that although Adecco had breached its non-delegable duty of care, that duty was not properly performed by CSR, and therefore Adecco had not directly breached its duty to the plaintiff for the following reasons:

  • Adecco had no direct involvement in or control over the work site, nor did it have a supervisor on site. It was not involved in the day to day work on the site, and had no knowledge that a full sized jackhammer was being used.
  • Adecco had been supplying the plaintiff’s labour to CSR for at least three to four years, and may have been aware that de-dagging would be carried out from time to time. However, this task was only performed infrequently and on dates which were not predictable, and so it was also unlikely that Adecco would have observed this being carried out during a site inspection.
  • Even if Adecco had observed the de-dagging process during a site inspection, it would have observed the work being carried out using appropriate equipment as part of a safe system of work.
  • The plaintiff was experienced in his job.
  • The plaintiff had been provided with a safety handbook by Adecco, which set out safety procedures and directed employees to notify Adecco of any hazardous or potentially hazardous situations. It also said not to undertake any tasks that were unsafe.

The Court found that no direct negligence by Adecco had been established. As a result, there was no reduction in the liability found against CSR.

Effect of the decision on host employers

The decision is significant in that it has altered the position taken by the New South Wales Court of Appeal in TNT v Christie in 2003, which has been upheld since that time. That case held that the labour hire firm was liable for 25 percent and the host employer for 75 percent of the plaintiff’s damages.

While each case will turn on its own facts, this recent decision highlights the importance of taking out comprehensive public liability insurance before engaging a labour hire agency to provide workers for your site. In some circumstances, the labour hire agency’s insurance will not protect you.

For more information on this case or public liability insurance, please contact HopgoodGanim’s Insurance and Risk practice.