When multiple companies share control, who's legally responsible? Supreme Court weighs in
The Supreme Court of New South Wales recently addressed a workplace injury case that questioned the identity of true employers within corporate groups.
The matter stemmed from severe injuries a worker sustained while performing maintenance work under remote supervision.
The case centred on whether the parent or subsidiary company was the true employer, while exploring how courts determine employment relationships when corporate structures create uncertainty about workplace safety responsibilities.
The worker first started at a grain handling facility in Narromine in 2007. After working elsewhere briefly, he returned after a chance meeting at the Narromine Races when the business owner offered him a position at a new facility in Coonamble.
A crucial finding emerged - the parent company had only been incorporated in March 2012, with the subsidiary that operated the Coonamble site established in April 2012. This meant the parent company could not have been the original employer in 2007.
The court stated that determining the true employer "depends upon the common law understanding of that notion... It is an issue of contract law, the question being what a reasonable person in the position of the parties would understand."
On January 18, 2016, while the worker was repairing a grain auger under phone instructions from the maintenance supervisor, a metal component exploded near his face. Pieces hit him across the nose and between his eyes, knocking him off a ladder. His head hit concrete and his nose was severely damaged.
The injuries required immediate transfer from the local hospital to Dubbo Base Hospital, then to Westmead Hospital in Sydney for surgery. The accident left him with permanent loss of smell, partial loss of taste, and ongoing headaches.
The court noted: "[The worker] impressed as a laconic and stoic character who, if anything, understated the effect of his injuries. When [the worker] was still lying on the ground beside the ladder, he could feel his nose flapping on his cheek underneath his eye."
The subsidiary handled employment administration including wages, superannuation, workers' compensation insurance, and tax obligations. However, the parent company exercised significant operational control.
The court found: "The evidence indicates that [the subsidiary] was no mere nominal entity the name of which was used only on certain documents but a business which was distinct from, if overlapping with, [the parent company]." This led to the conclusion that the subsidiary was the true employer.
The decision explained: "The accepted facts that [the parent company] had power to reprimand [the worker], and to direct him as to what work to do and how to do it, are significant matters pointing towards [the parent company] being the employer. However, those matters are not definitive."
After several attempts to return to work, the worker eventually took a position with fewer responsibilities but worked longer hours to maintain income.
The court awarded $521,134 in total damages, covering non-economic loss, past and future economic loss, superannuation, expenses, and domestic assistance.
The judgment noted: "The evidence indicated a decrease in [the worker's] earning capacity in terms of the level of responsibility he was able to take on. And there is obvious room for doubt about whether [the worker] would be able to continue working long hours in order to sustain his earnings."
