New laws come into effect on 27 June 2020 with potential impacts on arrangements such as labour hire, temping and secondments.
The Employment Relations (Triangular Employment) Amendment Bill covers ‘triangular’ employment situations where an employee is employed by one organisation but performs work for the benefit of and under the control and direction of another organisation (controlling third party). For example, this could cover labour hire workers, temps and secondees.
When the Act comes into effect later this month, employers and/or workers in a triangular employment relationship can apply to the Employment Relations Authority to join the controlling third party to proceedings to resolve a personal grievance claim.
The Authority must grant the application if it is satisfied that:
- there is an arguable case that the party is a controlling third party; and
- that the controlling third party’s actions caused or contributed to the personal grievance; and
- the controlling third party was advised of the personal grievance by the employee within 90 days of the alleged personal grievance occurring or coming to the notice of the employee. Alternatively, an employer may notify the controlling third party within 90 days of the employee raising a personal grievance with the employer.
The Authority may also, of its own motion, join a controlling third party to proceedings.
What are the consequences?
If you are joined to proceedings as a controlling third party:
- You may be directed to attend mediation; and/or
- The Authority may order that you and the employer pay compensation for lost earnings and/or distress in a way that reflects your respective contributions to the situation giving rise to the grievance.
The Authority can’t order reinstatement of the worker to your organisation. However, based on existing case law, it is already open to a worker to bring an alternative claim arguing that they are, in fact, an employee directly of the controlling third party. This involves an assessment of the ‘real nature of the relationship’ and considering issues such as control, supervision and integration into the organisation. If a worker is successful in a claim of this nature, then reinstatement is a potential remedy.
Preparing for the changes
In preparation for the upcoming changes, we recommend that organisations review contractual arrangements/template documents in relation to workers performing work as part of a ‘triangular’ relationship. The way in which these relationships operate in practice should also be carefully reviewed to identify and address any risk factors.
Get in touch
If you have any queries, or if we can assist further, please don’t hesitate to contact one of the team.