Japanese brewer Kirin may be forced to send up to 100,000 slabs of Tooheys New to former employees stripped of their entitlements under an apparent sham-contracting arrangement.

Crikey can reveal that 10 sacked employees at Tooheys’ Lidcombe brewery are pursuing Lion Nathan — a wholly owned subsidiary of Kirin — in Fair Work Australia for hundreds of thousands of dollars in unpaid entitlements, including annual leave, long-service leave, redundancy payments — and beer.

The employees worked for labour hire firm FP Group, rather than Tooheys, despite undertaking identical tasks to their company brethren. They were forced out last October when Tooheys replaced FP with fellow labour-hire firm Skilled.

In a precedent-setting case that could have far-reaching ramifications for the future of arm’s-length contracting, the applicants will allege that Tooheys was their “true employer” and therefore liable for past entitlements.

For many years, Tooheys employees have been given a “beer ticket” every week to the value of one slab. However, many casuals and contractors were denied the benefit — a FWA finding that Tooheys was the true employer could lead to more than 80 former workers demanding up to 20 years of back pay and their allocation of full-strength beer.

The case will be heard in mid-August before deputy president Peter Sams.

The background to the dispute is a long one. FP forerunner Feyman was set-up in 1991 by a group of Lidcombe middle managers to bust the two militant unions on site at the time — the CEPU and the AMWU.

“They took their Tooheys shirt off on the Friday and put their FP shirt on the Monday,” said one source close to the firm. “FP’s fee was at the discretion of Tooheys, and FP only handled basic tasks like recruitment and payroll. The rationale was that these guys were mates of the union members and the members were less likely to criticise them than Tooheys,” the source said.

Andrew Sands, who worked for nine years at the Lidcombe brewery before being given his marching orders last year, is owed eight weeks annual leave as well as redundancy payments and the beer tickets denied to him as a contractor. Sands said, depending on Sams’ judgment, Tooheys could be compelled to send him 468 slabs of New.

“I guess that they’re trying to streamline their activities but there’s a right way and a wrong way of doing it,” he said.

Nine other employees have concurrently lodged unfair dismissal claims with the workplace regulator.

After assuming the Tooheys contract last year, Skilled forcibly rehired the majority of former FP workers. But if the brewer is fingered in Fair Work it will be logically liable for their payments in addition to about 60 casuals in the same boat. At its peak 10 years ago 50% of the beer production workforce — about 120 people — were employed by FP.

In a previous hearing before Sams in March, FP tried to convince the tribunal that Tooheys was the employees’ true employer and simultaneously sought protection under section 120 of the Act that provides for reduced payments if alternative employment is immediately found. However, Sams found that claim was tautological — and he will now separately rule on the “true employer” claim.

A letter sent to Tooheys last year by FP Group manager Byron Smith, obtained by Crikey, alleges that “the cost of business establishment was paid by Tooheys, premises rental was paid by Tooheys, and the directors of Feyman selected from Tooheys management.” It alleges that the company squeezed out FP by ratcheting down its chargeout rate to the point where the firm was forced to hire employees at cost.

The role of FP Group was shady at times. Over its 20-year contract, allegations swirled that it was leaned on to cover up a s-xual assault and physical assaults by Tooheys employees on the Lidcombe premises. The two victims were later shifted out of the company.

A Lion spokesperson told Crikey that “given the confidentiality of the matter, Lion is not in a position to comment”. Kirin purchased Lion in a $3.5 billion takeover deal in September 2009.