Triangular Employment – Legislation Update

June 2019

The Employment Relations (Triangular Employment) Amendment Bill has passed through its third reading in Parliament.

The Bill provides a mechanism for employees in a ‘triangular’ employment relationship (for example, a labour hire situation) to raise a personal grievance with the entity that ultimately controls their work.

What does this mean in practice?

Employees will be able to raise a personal grievance against their employer and any “controlling third party” that the employee has worked for.Controlling third party means a person who has a contract or other arrangement with an employer, under which the employee has performed work for the benefit of that person. In a typical labour hire situation, the employer would be the agency that contracts directly with the employee. The controlling third party would be the end user; the employer’s client for whom the employee is directed to work.A person or entity will be considered a controlling third party if they exercise control or direction over an employee in a similar or substantially similar way to how an employer exercises control over an employee.

Changes to raising a personal grievance

Either an employee or an employer (or both) can join a controlling third party to a personal grievance claim. Controlling third parties will only be joined to a claim if the alleged action that relates to the personal grievance occurred while the employee was working under the control or direction of the controlling third party.If an employee wishes to raise a personal grievance claim against the controlling third party, they must do so within 90 days of the date on which the action alleged to amount to a personal grievance occurred.  If an employer considers that a controlling third party caused or contributed to a personal grievance, raised by an employee, they must notify the controlling third party of the grievance within 90 days of the date on which the employee raised the grievance with them.   The controlling third party can then later be joined to proceedings brought to consider the grievances, if there is an arguable case they caused or contributed to the grievance. If it is established by the Authority or Court that the actions of a controlling third party caused or contributed to the situation that gave rise to a personal grievance, remedies can be awarded against them. The Authority or Court can award remedies against both the employer and controlling third party. The amount that is awarded against each party will be based upon the extent to which the actions of the employer and controlling third party contributed to the situation resulting in the personal grievance.

Further information

This new law, once it comes into effect, will have implications for all companies who use labour hire or recruitment agencies for temporary employees, and for the agencies themselves.  The Bill reinforces the principle that employment rights are applicable to all employees, including those engaged in temporary working arrangements.  We recommend care is taken in all decisions affecting a temporary employee’s employment, particularly in relation to the engagement and termination of their work.

The commencement date of these new provisions has yet to be confirmed.

Please contact us if you would like more information about this new law or to discuss how the changes may affect your business.

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