Increased protections for Triangular employment relationships

The Employment Relations (Triangular Employment) Amendment Act 2019 (the Act) has passed, recognising the growing number of New Zealanders who work in triangular employment arrangements, and providing greater protection to employees in these relationships.

‘Triangular employment relationships’ is a term used to describe where an employee is employed by one organisation but working under the direction of another. This is commonly seen in temporary contracting arrangements, where a labour hire company employs workers and then contracts with another business (the ‘controlling third party’) to supply those people to perform work for the controlling party.

Under current law, a worker cannot claim a personal grievance against a controlling third party. That position is set to change, as the Act has passed, and will come into effect in June 2020.

The Act provides that where an employee is employed by one employer but working under the control and direction of another organisation, that other entity (the ‘controlling third party’) can be joined and held liable for a personal grievance claim raised by the employee against their employer. An employer can also apply to join a controlling third party to a personal grievance proceeding they are facing, provided they notify the controlling third party within 90 days of the personal grievance being raised.

Where a successful personal grievance is determined, the Employment Relations Authority or Employment Court will be obligated to consider the extent to which the employer and controlling third party caused or contributed to the personal grievance in apportioning any award of reimbursement and/or compensation.

To minimise the risk of joint liability for any personal grievance claim, organisations working with external labour hire will need to take care to prepare well for the Act’s introduction in 2020, particularly those organisations that rely on labour hire arrangements to provide a seasonal or temporary workforce. This includes ensuring that all parties are clear as to who the employer is. Employers of labour hire workers are also encouraged to manage any variations to employees’ terms and conditions, as well as any processes with employees that may affect their employment.