Agency Employment: How It Works

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Agency employment is where a person is employed as a contract or temporary worker to fill a position in a host company. The agency is the worker’s actual employer and is responsible for payroll and taxes, superannuation, recruitment/dismissal/discipline, workers’ compensation. The host company is responsible for direction of tasks or jobs to be undertaken and determining the work available for the temporary worker on site. Normally there is a joint responsibility in so far as occupational health and safety is concerned.

The labour hire situation results in a division of responsibility for the agency employee between the agency and the client. How should common law accommodate this? Should the agency employee be regarded as having a single employer or is there scope to consider join employment or a temporary transfer of employment to the client?

The rule at common law is that an employee cannot be transferred by his or her employer to the employment of another person without some act of assent, express or implied, on the employee’s part. The essence of a contract of employment is that it is freely entered into bargain between two parties in which there is the obligation of personal service to the employer. The common law principle that an employee cannot be transferred to a new employer without his or her consent is relevant to the question whether an employee could be transferred temporarily to another employer.

Where the agency worker is injured at the client’s workplace, both the client and the agency may be liable to pay damages to the injured worker. The agency can still be liable under both occupational health and safety legislation and at common law. This may be the case even if the agency employee is working on a client’s premises where there may be diminished opportunities to ensure a safe system of work. An additional basis upon which the labour hire company employer can be liable is breach of a non-delegable duty of care. The effect of this...
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