Recruitment companies should include specific provisions dealing with bullying and discrimination in their on-hire contracts with clients, and should also ensure clients have their own policies in place, according to leading workplace lawyers.

The Sydney Water Case covered in Shortlist earlier this week serves as a reminder of the potential liability recruitment companies face under discrimination and OHS legislation if their on-hire workers are discriminated against or bullied on a client site.

But recruitment companies and clients can do a lot to both prevent bullying and discrimination, and minimise their liability say workplace lawyers.

"I think we're going to see more and more cases where a labour hire employee sues both parties [the recruitment company and the host employer]," said Kemp Strang senior associate and workplace law specialist, Nick Noonan.

He said as the employer, the labour hire company has an express obligation not to discriminate, but also, under OHS legislation, to ensure the health and safety of their employee, and this includes prevention of bullying.

"It's probably prudent for the labour hire contract between the recruitment company and the client employer to have specific provisions in there covering prevention of bullying and discrimination", said Noonan.

He said he was seeing more and more occasions where labour hire contracts contained provisions specifically indemnifying the recruitment company from claims resulting from discrimination or bullying of their employees by the client employer's staff.

"It doesn't mean it's going to be enforceable", said Noonan, "but it's evidence of the intention of the parties that the employer client prevents discrimination and bullying."

He recognised that some client employers may be reluctant to accept such indemnities, and this would be a matter for commercial negotiation. "You might have to negotiate with clients a bit, but it might just serve to emphasise to the client the importance of it [preventing bullying and discrimination]."

Noonan said recruitment companies should also ensure that their clients had anti-bullying and discrimination policies in place, and these were wide enough to cover on-hire workers, consultants, contractors and any other visitors to the workplace.

"You may even make it a requirement, part of your contract that before you dealt with particular clients they had a policy in place".

He said it was also important for recruitment companies to stay in close contact with their on-hire workers and make sure they immediately report any problems they are experiencing in a workplace.

"The recruitment company, whether they are the employer, or if they're a principal if they've got them on as contractors, should be having regular communication with them.

"There should also be a provision in their contract that makes it clear that if they've got any issues with the host client that they come straight back to the labour hire company. This might also include communicating the problem with an HR person from the client company so right from the first occasion everyone is being made aware that there is an issue."

"After all at the end of the day, everyone is going to be liable," Noonan said.

His comments were supported by Thomsons Lawyers employment law partner, Jacquie Seemann, who advised recruitment companies to insist that their client companies had policies preventing bullying and discrimination in their workplace.

She also suggested that before placing an on-hire worker with a client, recruitment companies should make an effort to investigate the company's background, to see if they had a history of complaints or if there had been any legal actions against them.

She said recruitment companies had an obligation not to place their employees in unsafe situations.