The Employment Relations (Triangular Employment) Amendment Bill received Royal assent on the 27th of June 2019. The Bill comes into force at the expiry of 12 months from the date of assent, or at an earlier date selected by the Governor General.
So what is “Triangular Employment”? The term represents a relationship where an employer contracts with another business to deliver services provided by their employee/s. A common kiwi example is where tradies sign an employment agreement with a labour-hire company, but are sub-contracted to another business for temporary work. The labour-hire company remains as the primary employer, but the other business is viewed as a controlling third party because of their control over the employee’s daily tasks.
The Employment Relations (Triangular Employment) Amendment Bill introduces amendments to the Employment Relations Act 2000. These amendments allow employees who are engaged in triangular employment relationships the ability to bring personal grievances against their controlling third parties. This means that within the next 12 months, the risk for businesses using temporary workers will increase significantly.
The Bill reflects the Employment Court’s change in attitude towards triangular employment relationships. In the 2017 case of Prasad v LSG Sky Chefs New Zealand Limited, the Employment Court analysed a labour-hire employee/third party employer relationship. The Court determined that the third party employer had enough control of the labour-hire employee’s everyday working lives to establish a traditional employer/employee relationship. The employees were therefore allowed to bring a personal grievance against the third party employer.
Echoing the above case, the Bill adds to current legislation by giving employees and employers the right to apply to the Employment Relations Authority to have the controlling third party joined to personal grievance proceedings. In reviewing an application to join the controlling third party to the proceedings, the Authority must be decide whether the third party business is a controlling third party per the Bill’s definition and whether the third party’s actions have contributed to the personal grievance.
As a result of this law change, New Zealand businesses will need to act strategically to prevent their temporary workers and labour-hire employees from raising personal grievances.