22 July 2019
The Employment Relations (Triangular Employment) Amendment Act 2019 passed into law last week. Employers who hire contractors, take on secondees or hire workers under traditional ‘labour hire’ situations need to be aware of the impact this legislation may have on their liability in relation to those workers who are not technically their employees.
This Amendment Act allows for employees who are employed by one employer but work at the premises of another (the “controlling third party”) to have access to Personal Grievances (PG) where the employee alleges there has been grievance caused by, or contributed to by, the controlling third party. This reinforces and follows recent case law where in certain triangular employment relationships, a third party has been found to be the employer for the purpose of assigning liability.
The Bill was extensively revised by the Select Committee, with the changes being implemented by the Committee of the Whole House. The final version in the Act removed altogether the right of employees to be covered by the collective agreement that cover other employees of the controlling third party, which was one of the main features of the Bill in its initial original form.
The Act provides a framework to enable a controlling third party to be joined to proceedings before the Employment Relations Authority or Employment Court, where that controlling third party may have caused or contributed to the personal grievance. The framework is prescriptive in terms of the steps that must be taken before a controlling third party may be joined to a proceeding, while also detailing what remedies may be available against a controlling third party, where they are found to have caused or contributed to the personal grievance.
The Act defines a “controlling third party” as a person who:
a. has a contract or other arrangement with an employer under which an employee of the employer performs work for the benefit of the person; and
b. exercises, or is entitled to exercise, control or direction over the employee that is similar or substantially similar to the control or direction that an employer exercises, or is entitled to exercise, in relation to the employee.
The most significant aspect of the Act is its expanded definition of a personal grievance, which allows an employee or employer to join a controlling third party to the employee’s grievance claim by applying to the Authority or Court. The Authority or Court also have powers to, at any stage of the proceedings, order at its own motion a controlling third party to be joined to the proceedings.
If it is determined that the employee has a grievance and it is found that a controlling third party caused or contributed to the circumstances that gave rise to the grievance, then the Authority or the Court may order the controlling third party to reimburse the employee for lost wages as a result of the grievance and/or compensate the employee under section 123 of the ER Act. The Authority or the Court must award any remedies against the employer and against the controlling third party in a way that reflects the extent to which the actions of each contributed to the situation that gave rise to the grievance.
One of the reasons that a host organisation might choose to use workers employed by someone else, is to protect itself from personal grievances. This Act will mean that the host organisation no longer has that protection.
If you have any concerns about your organisation’s use of third party labour please contact our legal team to discuss the impact of this legislation.
Diana Hudson | Managing Solicitor
Diana Hudson | Managing Solicitor | 03 456 1804 | 021 816 469 | firstname.lastname@example.org
David Browne | Senior Solicitor | 03 456 1812 | 021 225 6938 | email@example.com
Adam Siwerski | Solicitor | 03 456 1809 | 021 756 809 | firstname.lastname@example.org
Stu Adamson | Solicitor | 021 197 4603 | email@example.com
Roger Gudsell | Advocate | 03 455 5165 | firstname.lastname@example.org