Labour hire employer liable due to negligence of host employer

Scaffolding representative of the scaffolding in Synergy Scaffolding v Alelaimat case

Mr. Alelaimat, an employee of DJ Scaffolding Services Pty Ltd (DJSS), suffered work-related injuries at a construction site in Artarmon, Sydney. He received compensation under the Workers Compensation Act 1987 (NSW) (WCA) and later sued Synergy Scaffolding Services Pty Ltd (Synergy) for negligence, as they directed, coordinated and supervised his work. The second defendant was the Workers Compensation Nominal Insurer (WCNI), the insurer for DJSS (which was deregistered).

The Incident

In 2012, Mr. Alelaimat was injured at a building site in Sydney. He was instructed by his boss, Mr. Hamka of Synergy, to pick up scaffolding from Artarmon. However, the scaffolding wasn’t ready, and he was told to help with the dismantling. During this process, a metal scaffolding piece struck him. Following the injury, he was advised to identify as a DJSS Scaffolding employee “for insurance purposes.”

The Trial

At first instance, the matter was heard in the Common Law Division of the Supreme Court. Both Synergy and WCNI filed cross-claims against one another. Synergy pleaded that Mr. Alelaimat was an employee of DJSS and that his injury and consequent loss and damage, were caused by the negligence of DJSS. Synergy claimed that but for the deregistration of DJSS, it would have been entitled to indemnity or contribution from DJSS in respect of the Plaintiff’s claim. WCNI claimed for contribution/indemnity as the Plaintiff’s injury, loss and danger were caused by the negligence of Synergy.

The primary judge: 

  • Found Synergy negligent, accepting that it was reasonably foreseeable that in dismantling the scaffolding, a piece might drop or fall because of “systemic, as opposed to causal negligence”. Synergy as the party in charge of the operation, ought to have taken precautions to implement an exclusion zone at ground level. 
  • Determined that DJSS had not breached its duty of care to Mr. Alelaimat because it did not have control over the premises and systems of work.
  • Ordered Synergy to pay $1,356,533.39 by way of damages to Mr. Alelaimat and indemnify WCNI for certain payments made under the WCA.

The Appeal

Synergy appealed the decision at first instance and the issues on appeal included:

  • whether DJSS breached its duty of care to Mr Alelaimat, as his employer;
  • if so, whether WCNI should be liable to Synergy for contribution, and if so, to what extent;
  • the operation of section 151Z of the WCA with respect to the claim;
  • whether Synergy was liable to pay damages in respect of medical expenses already paid by WCNI to or on behalf of Mr Alelaimat.

Liability of DJSS (Employer) to Mr Alelaimat

Synergy’s appeal centred around the liability of DJSS to Mr. Alelaimat in negligence. In deciding the liability of DJSS to Mr. Alelaimat, Justice Campbell noted as follows:

  • DJSS was under a duty to ensure Synergy provided Mr. Alelaimat with a safe system of work.
  • The duty of care owed by DJSS to Mr. Alelaimat was non-delegable.
  • In labour hire arrangements, it is no answer to a claim by an employee injured by the negligence of a contracting party for the employer to say:
    • that it took what steps it could to ensure the contracting party acted reasonably in the provision of a safe system of work.
    • that it did not have the opportunity to intervene to prevent the injury.
  • The conclusion that Mr. Alelaimat’s injury was caused by the negligent failure of Synergy to provide a safe system of work was sufficient, on the application of the Kondis principle, that DJSS was liable to Mr. Alelaimat for that negligence.

With this, the Court concluded that the primary judge erred in deciding that DJSS was not liable to Mr. Alelaimat. The Court set aside the judgment in favour of WCNI against Mr. Alelaimat. Judgment was given for Mr. Alelaimat against WCNI in the sum of $917,686.00.

Liability of DJSS/WNCI to Synergy

Synergy appealed the decision that WNCI was not liable to it, on the basis that DJSS was in breach of its duty of care to Mr. Alelaimat. The potential liability of WCNI to Synergy arose in the appeal in two ways:

  • first, with respect to Synergy’s claim for reduction in the damage it is liable to pay to Mr Alelaimat by reason of s 151Z(2)(c) of the WCA; and
  • second, under its cross-claim against WNCI.

Section 151Z Workers Compensation Act 1987 (NSW)

With regard to Synergy’s claim for reduction pursuant to s 151Z(2)(c), this section applies where a plaintiff has a cause of action for damages against both their employer and third party in respect of an injury. Of relevant consideration is paragraph (c) of s 151Z(2)(c) which determines the contribution that the third-party tortfeasor is entitled to recover from the employer tortfeasor. Any contribution to be made by WCNI to Synergy was to be determined by what was just and equitable “having regard to the extent of DJSS’s responsibility” for Mr. Alelaimat’s injury.

The Court noted that DJSS’ role in Mr. Alelaimat’s injury was lacking, apart from its liability as his employer. It was unknown whether any instructions were given by DJSS to Mr Alelaimat. What was clear was that DJSS had knowledge that Mr. Alelaimat was engaged by Synergy to drive a truck, but not assist in dismantling scaffolding.

The Court held that DJSS could not have reasonably have thought it was necessary to direct him to stay out of the scaffolding area to prevent injury. The Court concluded that no breach of duty by DJSS existed other than its failure to ensure that Synergy provided the employee with a safe system of work. The Court held that Synergy did not discharge the onus of proof to demonstrate its entitlement to any contribution from DJSS under s 151Z(2)(c).

Orders made

Further to its findings, the Court of Appeal made the following orders:

  1. The Judgment for Mr Alelaimat against Synergy in the sum of $1,356,533.39 be set aside;
  2. In lieu thereof, judgment for Mr Alelaimat against Synergy in the sum of $1,180,691.60;
  3. Judgment for WCNI against Mr Alelaimat be set aside;
  4. In lieu thereof, judgment for Mr Alelaimat against the WCNI in the sum of $917,686.00;
  5. The order that Synergy indemnify the WCNI pursuant to section 151Z(1)(d) of the WCA in sum of $246,202.54 be set aside;
  6. Costs be reserved.


The Court held DJSS liable, by virtue of the Kondis principle, sheeting home liability to the employer because of the negligence of the host, Synergy.  However, when considering primary liability from DJSS to Mr Alelaimat, in the master servant context, DJSS was not considered negligent because Mr Alelaimat was injured performing work that was not foreseen by the employer. 

The judgment highlights that a labour hire employer will generally be found liable for a worker injured in host employment, if the host employer was negligent.