Ending a labour hire placement: who dismisses, and what the host can and can't do

Every few weeks a host tells us about a worker who isn't a fit. Late twice, slow on the pick face, or just not the right attitude for the team. The instruction is usually the same: "Don't send them back tomorrow." We understand it. You're running a site and you need the shift to work.

But it helps to know what that instruction means legally, because the answer isn't the same as when you let go of your own employee.

You end the assignment. The agency deals with the employment.

The Fair Work Ombudsman describes labour hire this way: the labour hire employer hires its employees and is responsible for their pay and entitlements. The worker is then sent to a host and works for the host, but is paid by the labour hire employer.

So when you're unhappy, you're ending the assignment at your site. Whether the worker's employment with the agency ends is a separate decision, and it belongs to the agency. Plenty of workers are moved to another host after a bad fit. Others do have their employment ended. We make that call, and we carry the legal obligations that come with it.

This is also why we ask hosts to give us the reason early and plainly, rather than just not rostering someone. We can't fix, coach or move a worker whose problem we don't know about.

What "dismissal" means

The Fair Work Ombudsman says dismissal is when employment ends because of a decision by the employer. Not all dismissals are unfair. In some cases, if the employer's behaviour forces an employee to resign, that can also count as a dismissal.

That last part matters for casual and rolling placements. If a worker is quietly dropped from the roster with no explanation and no conversation, it can become a dispute about what actually happened. Clear, documented communication protects everyone.

When unfair dismissal applies

Unfair dismissal is when an employee is dismissed in a way that is harsh, unjust or unreasonable, is not a genuine redundancy and, for small business employers, is not consistent with the Small Business Fair Dismissal Code.

To be eligible to apply to the Fair Work Commission, the Fair Work Ombudsman says an employee must:

• have worked for that employer for at least 6 months, or 12 months if it's a small business (fewer than 15 employees)
• be covered by the national workplace relations system
• be covered by an award or enterprise agreement, or earn less than the high income threshold

The application has to be lodged within 21 days of the dismissal. Two points follow for hosts:

1. The six months is counted against the employer, which is the agency, not you. A worker who has done five months across three different host sites can still have six months of service with their agency.
2. The Fair Work Ombudsman says casuals are not counted when working out whether a business is small, unless they're engaged on a regular and systematic basis. Whether a particular casual meets the eligibility rules is a question for the Commission, not something to guess.

Notice the reverse too. A worker with under six months' service usually can't bring an unfair dismissal claim, but that does not mean anything goes. Underpayments, general protections and discrimination rules apply from day one, and a fair process is still the right way to treat people.

What the Commission looks at

When deciding if a dismissal was harsh, unjust or unreasonable, the Fair Work Ombudsman says the Commission considers several factors, including:

• whether there was a valid reason relating to the employee's capacity or conduct
• whether the employee was given the reason and a chance to respond
• if it was about underperformance, whether they had been warned beforehand

If the Commission decides a dismissal was unfair, it may order reinstatement or compensation.

For a host, the practical lesson is simple. Feedback you give in the moment is the evidence. A short note to the agency ("late on Tuesday and Thursday, 25 and 40 minutes, supervisor spoke to him on Thursday") is far more useful than "just not working out". It lets the agency give the worker a fair chance to respond or improve before anything bigger happens.

Notice of termination

Separate from fairness, the National Employment Standards can require notice when an employer ends employment. The Fair Work Ombudsman sets the minimum by continuous service on the day notice is given:

Employees over 45 with at least 2 years of continuous service get an extra week. An employer can have the employee work the notice period or pay in lieu of it.

There are exceptions. Notice isn't required if an employee is dismissed for serious misconduct, though the employer must still pay outstanding entitlements. The Fair Work Ombudsman also notes that casuals aren't entitled to written notice under the NES, and that time spent as a casual usually won't count toward continuous service for notice. Many labour hire workers are casual, but not all are, and awards or agreements can set longer periods. This is the agency's job to work out, not yours.

What this means for you as a host

• Put the reason in writing to the agency. Specifics, dates, and anything you already said to the worker.
• Raise issues early. A problem you mention in week one can be addressed. One you mention in week eight, when you say it's been building, is harder to deal with fairly.
• Don't tell the worker their employment is over. You can end the assignment at your site. The employment conversation belongs to the agency.
• Never use this to avoid a rule. Safety concerns, an injury report or a pay question raised by a worker should be handled properly. Ending a placement soon after someone speaks up looks bad and may breach other protections.
• Check your agreement. Many service agreements set out how an assignment can be ended and with how much notice. The more casual the arrangement, the more flexible this tends to be. For how bookings, minimum shifts and cancellations are paid, see minimum shifts and cancelled shifts.

If you're still working out whether labour hire suits you, our guide on how to brief an agency is the best way to avoid a poor fit in the first place, and casual to permanent covers what happens as placements get longer. You can also see how we work on our labour hire page.

This is general information, not legal advice. Dismissal law turns on the facts, so get advice on your specific situation.