However, in modern workplaces, more complex arrangements have emerged, particularly triangular employment. Triangular employment refers to situations where an employee works under the direction of an organisation that is not their direct employer.
This type of employment is common in industries that rely on labour hire companies, temp agencies, and secondments. However, the complex nature of triangular employment can raise important questions about employee rights, and legal protections.
In this article, we’ll explore the concept of triangular employment, the relevant legal framework, and your rights as an employee.
What is Triangular Employment?
Triangular employment occurs when an employee is employed by one entity (e.g., a labour hire company) but works under the control, supervision, or direction of another organisation (e.g., a host business).
This differs from standard employment relationships where the employer has full authority over the employee’s work.
Common examples of triangular employment in New Zealand include:
Labour hire arrangements: A temp agency employs a worker who is placed in a company for a fixed period.
Secondments: An employee from one organisation temporarily works in another organisation.
Outsourcing arrangements: A worker provides services for a company while technically employed by a third party.
In these situations, the worker may take daily instructions from the host company, but remain an employee of the agency or outsourcing firm.
Legal Framework
Before 2020, triangular employment relationships in New Zealand presented legal challenges, particularly regarding who is responsible for employment conditions, disputes, and grievances. Employees in these arrangements often faced difficulties raising concerns about unfair treatment because the host organisation was not their legal employer.
To address these issues, the Employment Relations (Triangular Employment) Amendment Act 2019 came into force in 2020. This amendment to the Employment Relations Act 2000 clarified the rights of employees in triangular employment situations, and outlined how they could seek remedies for employment issues.
Key Provisions of the Triangular Employment Amendment Act
1. Definition of a Controlling Third Party
The law defines a ‘controlling third party’ as an organisation that:
Exercises control or direction over a worker’s work.
Is not the worker’s direct employer.
2. Allowing Employees to Raise a Personal Grievance Against a Controlling Third Party
Employees in triangular employment can bring a personal grievance claim against both their direct employer, and the controlling third party. This means that if a host organisation engages in unfair treatment or discrimination, the affected employee can hold them accountable.
3. Joint Liability for Employment Disputes
If an employee successfully raises a personal grievance, both the direct employer and the controlling third party can be held responsible. Remedies (such as compensation or reinstatement) may apply to both parties.
4. Process for Raising a Personal Grievance
The employee must notify their direct employer first. The employer can join the controlling third party to the grievance process, allowing both parties to be involved in mediation and resolution.
Employee Rights in Triangular Employment
Employees in triangular employment arrangements have the same rights as workers in traditional employment relationships. These rights include:
1. The Right to a Written Employment Agreement: The direct employer must provide an employment agreement outlining pay, conditions, and termination procedures.
2. The Right to Fair Treatment: Employees are entitled to fair treatment, free from discrimination, bullying, or unfair dismissal.
3. The Right to Raise a Personal Grievance: If an employee believes they have been treated unfairly, they can raise a grievance (within 90 days, 12 months for sexual harassment) with both their direct employer and the controlling third party.
4. The Right to Be Paid Fairly: Employees must receive at least the minimum wage and correct entitlements, including holiday pay and sick leave.
5. Health and Safety Protections: The Health and Safety at Work Act 2015 places duties on both the direct employer and the host organisation to provide a safe working environment.
Employer Responsibilities in Triangular Employment
Both the direct employer and the controlling third party have obligations to employees.
Obligations of the Direct Employer
Providing an employment agreement that complies with labour laws.
Ensuring wages, holiday pay, and leave entitlements are correctly paid.
Addressing any grievances or disputes raised by the employee.
Obligations of the Controlling Third Party (Host Organisation)
Ensuring a safe and healthy work environment.
Treating the worker fairly and not engaging in discrimination or unjustified dismissal.
Participating in employment dispute resolution processes if necessary.
Not interfering with the worker’s ability to exercise their employment rights.
Failure to meet these obligations can result in legal consequences, including financial penalties, and liability for employment disputes.
Challenges and Risks in Triangular Employment
While triangular employment provides flexibility, it also presents challenges for employees:
Confusion over who is Responsible: Workers may not know whether to approach their employer or the host organisation for issues like pay or unfair treatment.
Lack of Job Security: Labour hire workers may be subject to short-term contracts with uncertain future employment.
Difficulties in Enforcing Rights: Before the 2020 amendments, employees struggled to take action against host organisations. Even now, some workers may face reluctance from host employers to formally acknowledge their responsibilities.
Conclusion
Triangular employment is an evolving aspect of the workforce, offering businesses flexibility while also presenting unique legal challenges.
As an employee, understanding your rights and raising potential concerns through the proper channels is crucial. As businesses continue to rely on alternative employment models – maintaining clear agreements, transparent policies, and ethical employment practices will be key to ensuring a fair work environment for all involved.
Experiencing Unfair Treatment?
Our expert team will help you understand your employment rights, and pursue resolution (including compensation) through various channels, such as: Without prejudice negotiations, mediation, the Employment Relations Authority, or Employment Court if required.
We also work on a no-win, no-fee basis – if we win your case, your employer covers the costs.
Get in touch for a free consultation! You can fill out this form – or contact us at admin@mahilaw.nz, or 0800 450 032.
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