A Case About Liability in Labour Hire Arrangements
Case: Moon Recruitment Pty Ltd v Execom Software Pty Ltd t/as Execom Personnel [2025] WADC 18
Issue: Who was the true employer of an injured worker—and therefore, who was liable for his workers’ compensation entitlements?
Introduction
The District Court of Western Australia recently considered a case that highlighted the legal complexities in labour hire arrangements. At the centre of Moon v Execom was a dispute between two companies over who employed Mr Horne, a fabricator injured on his first day at work.
This case reinforces the importance of properly identifying contractual parties and clarifies the test for determining an employer in multi-party arrangements.
Background
During August 2019, Mr Horne was hired by Moon Recruitment Pty Ltd for a short-term role at Echo Marine, a boat builder in Henderson, WA. Moon Recruitment operated as a labour hire company, it paid Mr Horne, but he worked under Echo Marine’s supervision.
By prior arrangement between Moon Recruitment and Execom, Mr Horne was then sent a written offer on 30 August 2019 by Execom in respect of the same job. He would in terms of the offer agree to provide his services to Execom’s ‘client’ and Execom would agree to pay him, as well as to take out workers’ compensation insurance to cover him. However, Echo Marine was not Execom’s client. It had no contractual or other relationship with Echo Marine, the business at which he was to work. Execom did arrange for Mr Horne to be covered by a workers’ compensation policy with its insurer. Mr Horne commenced work at Echo Marine and was injured soon thereafter. Some weeks after his injury, Mr Horne signed the Execom offer. Execom made a claim to its insurer, which accepted liability to make workers’ compensation payments to Mr Horne and proceeded to do so.
Despite initially making a claim with its own insurer, Execom later argued that Moon Recruitment, not Execom, was Mr Horne’s true employer and thus liable for his compensation. Mr Horne, meanwhile, lodged claims against both companies. The applications were heard together, and the arbitrator found that Moon Recruitment was in fact Mr Horne’s employer.
Legal Framework
The appeal was heard under the Workers’ Compensation and Injury Management Act 1981 (WA), specifically section 247(2), which requires a question of law to be determined on appeal.
Moon Recruitment’s grounds of appeal were:
- The arbitrator erred in finding no contract existed between Execom and Mr Horne.
- The arbitrator erred in finding there was a contract between Mr Horne and “Moon Recruitment,” rather than the incorporated entity, Moon Recruitment Pty Ltd.
Key Legal Questions
- Who was Mr Horne’s employer for the purpose of workers’ compensation?
- Was the correct entity held liable (that is, Moon Recruitment Pty Ltd or Kerrie Moon in his personal capacity)?
Findings
- Identity of the Employer
The Court found that:
- All arrangements and interactions regarding Mr Horne’s employment were handled by Moon Recruitment.
- Mr Horne had limited knowledge of Execom and only received a contract offer after his injury.
- Execom’s involvement stemmed from a separate contractual arrangement with Moon.
The Court applied the “reasonable person” test, asking: What would a reasonable person in Mr Horne’s position believe about who their employer was? The answer pointed clearly to Moon Recruitment.
- Applicability of CFMMEU v Personnel
While CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 was considered, the Court agreed with the arbitrator’s decision to distinguish it. That case dealt with characterising a work relationship under a clear contract, whereas Moon v Execom focused on contract formation and employer identity.
The Court also cited Agrigrain v Rindfleish [2024] NSWCA 295, supporting the distinction between characterisation and identification cases.
- Moon Recruitment vs. Moon Recruitment Pty Ltd
Initially, the arbitrator had found Kerrie Moon personally liable due to the incorrect naming of the employer. However, this issue was not raised during arbitration, so no legal error could be claimed on appeal.
Still, the Court allowed Moon Recruitment to submit documentation showing its corporate status. The Court then amended the orders to reflect Moon Recruitment Pty Ltd as the correct party.
Conclusion
The appeal was dismissed on both grounds:
- Execom was not Mr Horne’s employer.
- The arbitrator did not err in attributing liability to Moon Recruitment (ultimately corrected to Moon Recruitment Pty Ltd).
The Court reinforced that, in such disputes, the key test is what a reasonable person would have understood about who employed them, based on objective facts and conduct.
Key Takeaways
- Contract formation and the identity of the employer are distinct from characterisation issues (as clarified in CFMMEU v Personnel).
- The “reasonable person” test is the guiding standard in disputes over employer identity.
- Properly naming legal entities is crucial as errors can lead to unintended personal liability.
- Courts may allow post-hearing corrections if compelling evidence (like ASIC documentation) supports the correction.