Digging into indemnity. Who is the employer in labour hire arrangements?

In Tazleem v Certain Underwriters at Lloyd’s [2026] NSWSC 124, the Supreme Court of New South Wales examined a workplace injury involving a labour hire arrangement. Although the Plaintiff worked at Better Truck Repairs Pty Ltd (BTR), he was legally employed by a separate labour hire company. Both entities breached their duty of care, but the key issue was who employed the Plaintiff.

So, what happened?

Sheik Abdul Tazleem was injured on 9 February 2018 while working at an industrial premises occupied by BTR. The Plaintiff was attempting to repair an excavator bucket which had been attached to the tines of a forklift. Whilst the Plaintiff attempted to remove it, the bucket suddenly detached causing him injury.

The Plaintiff sued two defendants - the public liability insurer of BTR, which was in liquidation, and the Workers Compensation Nominal Insurer standing in place of JP Business Consulting Pty Ltd (JPBC), a deregistered labour hire company that allegedly employed the Plaintiff.

BTR’s insurer argued the Plaintiff was employed by BTR and that its public liability policy did not respond to the claim as it excluded injuries sustained by an ‘employee’.

Who was the employer?

Under an agreement between BTR and JPBC, any person working at BTR automatically became an employee of JPBC. The Plaintiff alleged he was not aware of this arrangement and was not aware of JPBC’s involvement until well after he suffered his injuries. The Court determined the identity of the employer is a question of contract law, and a reasonable person would understand that the employment contract was with JPBC, not BTR.

The Court considered that the question of employment was derived from the manner in which BTR carried out its business, particularly its relationship with JPBC as a labour hire arrangement between the two companies, noting that it was JPBC who paid the Plaintiff’s wages.

Although BTR conducted an interview with the Plaintiff, accepted him to work at the premises and set the conditions of work, it was found that this did not create a contract of employment. It simply dictated the time and manner in which the Plaintiff would work. It was distinguished by Elkaim AJ that there was a difference between BTR hiring the Plaintiff as an employee and BTR arranging for him to work at BTR premises, where he would automatically become an employee of JPBC owing to the pre-existing contractual arrangement.

The decision

The Court concluded the arrangement between BTR and JPBC was of a labour hire nature and that, in being deemed suitable for the position by BTR, the Plaintiff became an employee of JPBC.

Accordingly, BTR’s public liability policy did apply to the claim and damages were awarded against the insurer as well as JPBC. Under the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW), the Plaintiff accepted that BTR’s $50,000 deductible should be taken off the amount payable by the insurer.