Introduction
In recent years, there has been an increasing willingness of the courts to find that in cases involving injury negligently caused by a labour hire employee, there has been a transfer of employment to the host employer such that the host employer rather than the actual employer has been held vicariously liable for the employee’s negligence.
However, in a recent NSW Court of Appeal decision, an important qualification was applied when assessing whether there had been the requisite transfer of employment. As a result, in certain circumstances, it may now be harder for an employer to transfer vicarious liability to the host.
History
Earlier Decisions
Before looking at that decision, it is useful to look briefly at the history and development of the relevant principles.
Up until recently, in Australia, the general rule was that an employer was vicariously liable for any acts or omissions of the employee, and only in ‘exceptional circumstances’ might there be a transfer of employment pro hac vice (‘for this occasion only’) to the host employer such that the host employer would be vicariously liable for the employee’s negligence.
In Deutz v Skilled Engineering1, the Supreme Court of Victoria discussed the relevant principles. In that case, the second defendant, Eric Sutton, was reversing a forklift along an aisle at the warehouse of the plaintiff, Deutz Australia, when he struck a beam causing much of the shelving to collapse resulting in damage to many valuable motors. Mr Sutton had been supplied to Deutz by the first defendant, Skilled Engineering, a labour hire company. The question was whether there had been a complete transfer of Mr Sutton’s employment from Skilled to Deutz such that Skilled could avoid being held vicariously liable for Mr Sutton’s actions.
When considering whether there had been a transfer of employment, the Court referred to the following longstanding principles, many of which were derived from the 1947 House of Lords decision in Mersey Docks2: (1) an employer who seeks to transfer vicarious liability for the negligence of a worker onto another entity bears a heavy onus, which may only be discharged in exceptional circumstances; (2) a transfer will less readily be inferred where the employer provides the equipment and provides a skilled worker; (3) a transfer will be more readily inferred where the worker operates a machine under the control of the host employer; (4) the contract between the general and host employer is not determinative of whether there is a transfer; and (5) a transfer is more likely to be found where, among other things, the host employer can direct not only what the worker does but how they are to do it.3
To illustrate the heavy nature of the onus, Ashley J noted, ‘I was referred to no case decided in the twentieth century in which the burden of showing transfer for purposes of imposition of vicarious liability was discharged.’4
The Court ultimately held that there had been no transfer of employment for the following reasons: Mr Sutton could be hired out to various clients; he wore workwear supplied by Skilled with Skilled’s logo on it; his wages were paid by Skilled based on timesheets supplied by Skilled; he was required to report all safety incidents to Skilled; and Deutz had no power of dismissal of Skilled employees. This was despite the fact that Deutz had given Mr Sutton instruction with respect to operating the forklift and certain tasks to be performed, and had given him advice and training regarding the performance of dangerous tasks.
Recent Decisions
More recently, there has been a number of decisions, including at the appellate level, in which a transfer of vicarious liability to the host employer has been estabished.
The first is the 2016 Western Australian Court of Appeal decision of Kelly v Bluestone.5 In that decision, the plaintiff was an employee of Ngarda Mining and Civil, the operator of the BHP Billiton owned the mine in Western Australia, where the incident occurred. The incident occurred when an excavator operator, Mr Scanlan, dropped a fully loaded excavator bucket onto the tray of the plaintiff’s truck, causing the plaintiff’s truck to shake violently, resulting in his suffering neck and back injuries. Mr Scanlan, an experienced excavator operator, was an employee of the second defendant, TSS Recruitment, a labour hire company. Ngarda was Mr Scanlan’s host employer.
At first instance, the District Court found that Mr Scanlan had not breached his duty of care to the plaintiff and that, in any event, Ngarda, not TSS, would have been vicariously liable for any negligent acts of Mr Scanlon. The latter point was significant to the plaintiff as Ngarda was not a party to the claim. The trial judge’s finding that there had been a complete transfer of employment was based, in part, on the fact that: induction and training was carried out by Ngarda employees; Ngarda was entitled to direct Mr Scanlan not only in what he was required to do but how to do it; Ngarda superintendents and mine supervisors controlled the systems and methods of communication between workers; no labour hire employees had a supervisory role; and there was no differentiation between labour hire workers and Ngarda workers on site. Conversely, TSS did not have the right to enter the mine site to exercise any control over the way work was done by Mr Scanlan, and it had no power to control communications between Mr Scanlan and other workers on site.
It also appears to have been relevant that labour hire employees were regarded as temporary employees of Ngarda and after three months were usually made permanent. In other words, it appears they were supplied to Ngarda with a view to eventually becoming permanent employees there.
On appeal, President McLure, with whom Murphy JA agreed (Mitchell J dissenting) acknowledged there was no precise formula for determining whether the circumstances gave rise to a complete transfer, but observed that ‘the focus is on who has the right to control the manner in which the act involving the negligence was done’.6 In this regard, Her Honour found that Ngarda had exclusive authority and control over the work performed by Mr Scanalon, and that TSS’s involvement was more akin to the provision of a HR function. Based on this, Her Honour agreed the only conclusion open to the trial judge was that vicarious liability for any negligent act of Mr Scanlan was transferred to Ngarda, as the host employer.
The next decision is the 2023 New South Wales Court of Appeal decision of Mt Owen v Parkes,7 which interestingly did not consider Kelly. In that case, the appellant, Mt Owen Pty Ltd, owned and operated a coal mine in the upper Hunter Valley. Mt Owen engaged Titan to supply qualified mechanics to work on heavy machinery at the mine. The plaintiff suffered an injury when a member of his team, Mitchell Kemp, dropped the blade of the bulldozer, causing the track on which the plaintiff was standing to flick up and crush his right leg. Prior to the incident, the plaintiff and his team had relevantly completed a job safety analysis (JSA) which was signed off by a Mt Owen supervisor. All three members of the plaintiff’s team, including Mr Kemp, were employees of Titan.
There was no dispute the actions of Mr Kemp were negligent. The trial judge also found that Mr Kemp was an employee pro hac vice of Mt Owen, and therefore Mt Owen was vicariously liable for the negligent actions of Kemp. In dismissing Mt Owen’s appeal, the Court observed that while a complete transfer of employment had been said to arise in only ‘exceptional circumstances’, modern labour hire arrangements and the statutory regulation of workplace safety may more readily lead to such a finding, depending on the nature and extent of control over a worker.
Basten AJA, who gave the leading judgment, noted that the transfer of control will not usually be sufficient to shift vicarious liability to the host unless that party is also in control of the manner in which the work is undertaken. He went on to observe that the evidence demonstrated: Mr Kemp’s employment could not aptly be described as temporary (he had been working at the mine for three years); he was subject to direction by Mt Owen’s supervisors as to the tasks to be performed, when they were to be performed, and their manner of performance; Mt Owen imposed detailed safety requirements on their manner of performance; and the purchase orders confirmed Mt Owen’s authority to undertake all these functions.8
Basten AJA also noted that while Titan had its own occupational health and safety policies, which it required its employees to follow, the trial judge had concluded that these policies did not interfere with the practical performance of Mr Kemp’s work, nor did they impinge on the capacity of Mt Owen to control that work. The finding that Mr Kemp was an employee of Mt Owen pro hac vice was also despite the fact that, unlike in Kelly, Titan had a presence on Mt Owen’s site; its supervisors frequently attended and consulted with employees in relation to matters of concern arising out of the performance of work at Mt Owen.9
As with previous decisions, ‘control’ seems to have been the touchstone for establishing a transfer of vicarious liability. However, it is worth noting that some significance appears to have been given by both the trial judge and the Court of Appeal to the length of time Mr Kemp had been working at the mine and the extent to which he had been absorbed into Mt Owen’s workforce. In this regard, the trial judge noted that, ‘Mr Kemp was in a different position … from both Mr Parkes and Mr Colby,’ who were temporarily deployed to cover Mt Owen mechanics on strike, and, unlike Mr Parkes and Mr Colby, ‘Mr Kemp was for all practical purposes absorbed into Mt Owen’s workforce.’10
De Martin & Gasparini Pty Ltd v Bartlett
This then brings us to the recent New South Wales Court of Appeal decision of De Martin & Gasparini Pty Ltd v Bartlett.11
The plaintiff, Mr Bartlett, was an experienced concreter and linesman. He was employed by Civic Contractors (Civic), a labour hire company, and deployed to provide concreting services to the first defendant, De Martin & Gasparini Pty Ltd (DMG) under a labour hire arrangement. On the day of the incident, the plaintiff and another worker were instructed by a representative of DMG to set up a concrete hose line to pump concrete for a concrete pour. The concrete boom had already been set up, and they were directed to move a concrete hose weighing 45 to 50 kilograms from one part of the building site to another closer to the boom. The plaintiff alleged the other worker picked up the hose and started walking before he was ready, which caused him to jerk forward and injure his back.
One of the issues at first instance and on appeal was who was vicariously liable for the other worker’s negligent acts. This was complicated by the fact that the plaintiff could not identify who the other worker involved in the incident was, or whether he was employed by DMG or Civic. DMG had twelve workers on site, eight of whom were employed by DMG and the other four by Civic. While the trial judge found that, on the balance of probabilities, the other worker was a DMG employee, he also held that, even if he had been a Civic employee, DMG would still have been vicariously liable for his actions on the basis the other worker was working under the supervision and direction of DMG as if he was an employee of DMG.12
However, on appeal, Lemming JA, with whom McHugh JA and Price AJA agreed, was critical of the trial judge’s analysis. After considering various court authority, including Kelly and Mt Owen, His Honour accepted DMG’s submission that there was no requisite transfer of control in respect of a familiar task of moving a concrete pipe around a building site, which Mr Bartlett said he had performed thousands of times throughout his career. This was presumably also the case for the other worker.
There was no evidence that DMG had taken any step to control the manner in which the other worker, or Mr Bartlett, was to perform that task,13 and His Honour further stated that, ‘[a] person is not without more vicariously liable for the tortious act of an independent contractor who performs a casual act of negligence when carrying out a function which is well within his or her expertise and as to which there has been no direction in relation to the manner of its performance.’14
De Martin & Gasparini was considered in the subsequent New South Wales Supreme Court decision of Scott v Usinch.15 In short, that decision concerned an injury to a worker caused by the negligent driving of a forklift by a labour hire employee. The Court, after considering De Martin & Gasparini, held there had, in the present case, been a transfer of vicarious liability on the basis that, unlike in De Martin & Gasparini, the tortious act did not arise out of the performance of a function within the labour hire employee’s expertise; he had been supplied as a labourer, not a forklift driver, and he did not have a forklift licence.16
Conclusion
It appears the recent willingness of the courts to find a complete transfer of vicarious liability to the host has been influenced by the development and normalisation of temporary work arrangements in the modern era and the statutory regulation of workplace safety.
As noted by President McLure in Kelly, there is no precise formula for establishing a transfer of vicarious liability, and all of the circumstances concerning the relationship need to be taken into account. For example, in both Kelly and Mt Owen, the circumstances were such that the labour hire employees had effectively been absorbed into the host’s workforce.
It now seems to be accepted though that for there to be a transfer of vicarious liability to the host employer, there must be transfer of control to the host not only as to the work to be undertaken by the labour hire employee but also the manner in which the work is undertaken. Evidence of the degree of control exercised can be found in the worker’s contract of employment, the labour hire agreement, and evidence as to how the work is undertaken and controlled by the host.17
An important qualification has also now been introduced based on the more recent decision in De Martin & Gasparini. A transfer of vicarious liability may only occur where the task being performed by the labour hire employee at the time of causing injury is outside his or her area of expertise, unless he or she has been specifically directed by the host as to how to perform the task in accordance with its agreed authority.
1 Deutz Australia Pty Ltd v Skilled Engineering Limited & Anor [2001] VSC 194.
2 Mersey Docks and Harbour Board v Coggins & Griffith (Liverpool) Ltd [1947] AC 1.
3 Deutz Australia Pty Ltd v Skilled Engineering Limited & Anor [2001] VSC 194, at [109] to [113].
4 Ibid at [114].
5 Kelly v Bluestone Global Ltd (in Liq) [2016] WASCA 90.
6 Ibid at [58].
7 Mt Owen Pty Ltd v Parkes [2023] NSWCA 77.
8 Ibid at [59].
9 Parkes v Mt Owen [2022] NSWSC 909, at [92].
10 Ibid at [97].
11 [2025] NSWCA 56.
12 Bartlett v De Martin & Gasparini Pty Ltd [2024] NSWSC 1172, at [17] and [37].
13 De Martin & Gasparini Pty Ltd v Bartlett [2025] NSWCA 56, at [40].
14 Ibid at [41].
15 [2025] NSWSC 983
16 Ibid at [162] and [163].
17 Mt Owen Pty Ltd v Parkes [2023] NSWCA 77, per Basten AJA at [49].
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The material contained in this publication is in the nature of general comment only, and neither purports nor is intended to be advice on any particular matter. No reader should act on the basis of any matter contained in this publication without considering, and if necessary, taking appropriate professional advice upon their own particular circumstances.
