Triangular Employment Update

The most common type of “triangular employment” is when a labour hire or recruitment company arranges for their employees to do work for a third party “client”. The labour hire/recruitment company invoices the client and then pays the employees. And so, a “triangle” is formed.

This arrangement can work well for several reasons, including the client not having to worry about the hiring or firing of employees. Advertising, reviewing CVs, interviewing and on-boarding staff is time consuming and when you need 50 workers for a construction project starting in a week, it can be incredibly efficient to get a labour hire company to do that leg work for you. The other “benefit” (until recently) has been the client’s ability to stay out of the employment relationship and therefore generally avoid liability for any personal grievance raised by the workers.

This last “benefit” left employees in a difficult situation; if something happened at work that would otherwise be grounds for a PG (such as bullying), the employer could claim they weren’t responsible as they’re not in control of the workplace and the client could claim they weren’t liable because they were not the employer.

To address this issue, the Employment Relations (Triangular Employment) Amendment Act was passed in 2019 and recently came into effect.

What’s changed?
In essence, this law change means that when an employee raises a personal grievance against their employer, they can also include a ‘controlling third party’ in their claim.

So, what constitutes a ‘controlling third party’? The Act defines it as a person (which includes a company):

1. who 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
2. who exercises, or is entitled to exercise, control or direction over the employee that is similar or substantially similar to the control or direction than an employer exercises, or is entitled to exercise, in relation to the employee.

In order to successfully join a controlling third party to personal grievance proceedings, the employee (or employer) must have notified the third party of the PG within the required time frames and have an arguable case the third party was both “controlling” and caused or contributed to the personal grievance. The Authority/Court also have the power to add a controlling third party to a proceeding at any time without a request from the employee or the employer.

If the employee is found to have a personal grievance, the Authority/Court can apportion liability and awards between the employer and the controlling third party based on how much each party contributed to the personal grievance.

What does this mean for you?
If you’re an employer who sends out staff to work under the control of a third-party client, it’s a good time to make sure your clients are aware of these changes. We also recommend looking over your client contracts to see if they need updating in light of the law change.

If you have day to day control over someone else’s staff, what you need to do (if anything) will depend on your circumstances. If you have staff of your own, it may be as simple as starting to (or continuing to!) treat your labour hire/temp workers as you do your own staff. If you don’t have any staff and just use temps, you might need to think about what this law changes means for you and whether you need to put some policies/procedures in place.

Wakefields Lawyers is here to help make the complex simple. If you need some assistance or just want to talk through your particular circumstances and get a steer on what this law change means for you, get in touch with us today at info@wakefieldslaw.com or 04-970-3600