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You may have heard the phrase “triangular employment relationship” thrown around, particularly in the media. Although it sounds complicated, the phrase refers to a common employment relationship, especially in industries that frequently rely on labour hire agencies to supply temporary workers.
A triangular employment relationship usually involves one company employing workers and then contracting with another company or organisation (a.k.a. a “host organisation”) to supply those people to them on a temporary basis. Often there is no documentation (and no contractual relationship) between the workers and the host organisation.
As the law currently stands, a worker in this situation cannot claim a personal grievance against a host organisation. However, a worker can file an application with the Employment Relations Authority (Authority) or Employment Court (Court) to assess the “real nature of the relationship” between the worker and the host organisation and seek a declaration that the worker is, at law, an employee of the host organisation. If this is found, then the worker can claim a personal grievance against the host organisation.
The process may be about to get a whole lot easier for workers in this situation.
On 1 February 2018, Labour List MP Kieran McAnulty introduced the Employment Relations (Triangular Employment) Amendment Bill (Bill). On 3 April 2019, the Bill passed its second reading. It is now at the Committee of the whole House stage, which means it is more likely than not to become law.
The original intention of the Bill was to amend the Employment Relations Act 2000 (ER Act) to “ensure that employees employed by one employer, but working under the control and direction of another business or organisation, are not deprived of the right to coverage of a collective agreement, and to ensure that such employees are not subject to a detriment in their right to allege a personal grievance”. In other words, that the workers could be covered by the host organisation’s collective agreement, even though they were not employed by the host organisation. However, following the Education and Workforce Select Committee’s final report on the Bill, all references to collective agreements were removed from it.
The amended form replaces the original Bill’s use of “secondary employer” terminology with “controlling third party” to make clear that the third party does not need to technically employ the employee, as the term “secondary employer” suggested. The amended Bill defines a “controlling third party” as a person 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
- 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 Bill 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 Bill would mean that the host organisation no longer has that protection.
The Employment Relations (Infringement Offences) Regulations 2019
There are numerous employment law changes which came into force on 6 May 2019. There is another change to look out for. From 6 May, individual employment agreements that are not in writing will be an infringement offence under the Employment Relations (Infringement Offences) Regulations 2019.
An employer is already liable to a penalty imposed by the Authority if it does not provide an employee with an employment agreement in writing. However, from 6 May it will also be liable to an infringement fee of $1,000 from a Labour Inspector. An infringement fee is basically a ‘spot fine’ similar to a parking infringement notice. An employer can elect to pay the fine, or to challenge the issue of the infringement notice.
Written employment agreements have been required for all new employees since October 2000. By introducing this infringement fee, Parliament is signalling that non-compliance (at this late stage of the game) will not be tolerated.
If you want to know more about triangular employment relationships, or you need help with your employment agreement, we’re always happy to chat.
