A new piece of legislation which has significant ramifications for the labour hire industry was passed into law on 27 June 2019.
The Employment Relations (Triangular Employment) Amendment Act 2019 allows a labour hire worker to potentially add a host client company to personal grievance proceedings which the labour hire worker takes against their employer (the “labour hire agency” or “temp agency”).
The amendment introduces this potential expansion of personal grievance claims by introducing the concept of a “controlling third party”. A controlling third party is 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
who 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.
Essentially the greater the extent to which a host company exercises control over the labour hire worker in a way that an employer would, the greater the extent to which a host company will be exposed to the risk of being deemed a “controlling third party”, which could allow the worker to add the host company to personal grievance proceedings.
Under the amendment, if a controlling third party is found to have caused or contributed to the situation giving rise to a valid personal grievance, that controlling third party can be ordered by the Employment Relations Authority or Court to pay personal grievance remedies. In awarding such remedies the Authority or Court will need to order them against the employer (the employment agency) and the controlling third party in a way that reflects the extent to which each contributed to the situation that gave rise to the grievance. Therefore it is likely that personal grievance remedies will be apportioned according to the respective fault of the employment agency and controlling third party in regard to the personal grievance.
The law change could potentially pit company against company as it also allows for the employer (employment agency) to add the host company to personal grievance proceedings as well. The change could potentially see an employment agency seeking to add a host company to personal grievance proceedings in a bid to minimise liability for personal grievance claims. It is difficult to say if this will occur with much frequency as it would be likely to depend on the extent to which the host company had been controlling the labour hire worker and the strength of the business relationship between the employment agency and the host company.
The Employment Relations (Triangular Employment) Amendment Act 2019 is an amending Act which makes changes to the Employment Relations Act 2000. However, these amendments do not come into effect until 27 June 2020, unless they are brought into effect on an earlier date by th