There has been a recent change to the New Zealand Employment Relations Act 2000 to provide more clarity for employers and employees in triangular employment arrangements.

What is a triangular relationship?

A triangular employment relationship is a situation where the employer (an Agency) arranges for an employee’s placement or assignment with a third party (the Controlling Third Party or CTP). 

Examples of triangular arrangements include where labour for a hire agency or temp agency places workers with various companies/businesses, or where there is a secondment arrangement.

What is a controlling third party?

This is a business or organisation where an employee, involved in a triangular employment situation, performs work for the benefit of the third party.

A CTP can direct or control an employee in a “similar, or substantially similar, way to that of an employer”, even though the employee might be paid by an Agency, rather than the CTP. 

If a third party fits within the definition of a CTP, they can be added as a party to a personal grievance, if the employee considers that the CTP caused or contributed to the grievance. 

A CTP can also be added as a party by the employer whom the grievance has been raised against.  The employer will have 90 days to join a CTP as a party to a grievance (starting from the date they first received notice of the grievance).

What factors point to whether the functions performed by the third party are “similar or substantially similar to an employer”?

The types of things that are likely to indicate control over an employee may include an ability to:

·         set work hours (start and finish times);

·         set remuneration (pay);

·         decide when holidays can be taken;

·         performance manage an employee;

·         instruct on, and supervise tasks; and

·         set the terms and conditions of an employment agreement.

Advice to employees:

The same process for raising a grievance will apply in a triangular arrangement, other than that the grievance will be raised with both an Agency and the CTP.  Employees have 90 days to raise their grievance unless the employer agrees or the Authority allows an extension. 

The same remedies will be available to the employee from an Agency, a CTP, or from both.  The remedies will be apportioned according to the level that each party contributed towards the grievance. 

Employees who wish to raise a grievance against a party who has ceased to exist (for instance where a company has gone out of business), will also have another avenue available in order to get compensated for a grievance they have suffered (assuming there is a triangular arrangement, and the other party has contributed to the grievance).

Employees are therefore encouraged to raise any grievance with both the relevant Agency and the CTP they actually work for, if applicable. 

Advice to CTPs and Agencies

CTPs will be wise to treat all workers with good faith and not take adverse action without good cause and without following a fair process.  Getting this wrong may result in costly and time-consuming grievances being raised against CTPs.

CTPs and Agencies are also encouraged to have robust and clear written agreements in place with the relevant workers and between themselves.  This will help ensure that all the parties in a triangular arrangement are clear about their roles, responsibilities, and expectations. 

It is also possible to reach an agreement between the CTP and an Agency to specify how liability for grievances will be dealt with.  It may be possible for instance to agree that one party will indemnify the other.  This will help parties to put in place adequate insurance measures too.

Read more about raising, and responding to, a personal grievance.