The Employment Relations (Triangular Employment) Amendment Act 2019 (the Act) came into force on 27 June 2020.
What is the scope of this Act?
Prior to the Act coming into force, employees could only bring personal grievances against their employers. The Act creates a right for employees in triangular employment situations to include a third party in their claim. It will only apply to parties in employment relationships. The Act does not cover independent contractors.
What are the key principles of the Act?
The Act introduces the concept of a “controlling third party“. For example, if Company A (the employer) has a contract with Company B (their customer) under which an employee of Company A performs work for Company B, and Company B exercises (or is entitled to exercise) control or direction over the employee, then Company B is likely to be a controlling third party. This control or direction must be similar to the control or direction that an employer exercises. Examples of relationships likely to be affected are labour hire companies and secondment situations.
This means if an employee raises a personal grievance that relates to an action that occurred while that employee was working under the control or direction of the controlling third party, then the employee or employer or both can apply to the Employment Relations Authority or the Employment Court to join the controlling third party to the proceedings to resolve the personal grievance.
- Whoever is making the application to join the third party will need to show that the party to be joined is actually a controlling third party. Therefore, had control or direction over the employee, and that the third party’s actions caused or contributed to the personal grievance.
- This will impact how the Authority or the court award remedies. The Authority or the Court will need to consider the extent to which each party’s actions caused the personal grievance and what proportion of the remedies each party should be held liable for.
Who will the Act impact?
The Act is likely to impact:
- Companies who provide or who use labour hire solutions
- Companies who second employees out of or into their businesses
- Temporary staff engaged via agencies
- Locum companies and those engaging locum workers
How can you prepare?
- Consider very carefully the contractual terms of any of the above mentioned scenarios, to ensure that each party is aware of their obligations in relation to:
- employee management
- the terms that must be adhered to in relation to any termination of a labour hire assignment, secondment, temporary role etc.
- whether indemnities should be sought in the event that claims are raised.
- Employment documents should clearly stipulate who the employer is.
- The true nature of the relationship should reflect who the employer is as stated in the employment agreement.
- Practically, companies using temps, agency staff and staff provided under a labour hire agreement must think carefully about how those staff are managed to ensure that any potential for a personal grievance is minimised.
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