Apparently, we live in the ‘age of flexibility’ where the need for flexibility is said to be the driving force behind the new economy, and in turn, driving new policies and regulatory approaches.
New Zealand’s response to the age of flexibility is a new law that will come into force on 27 June 2020 which will enable employees to raise a personal grievance against any organisation that has the ability to direct or control the employee’s day-to-day work.
What is a triangular employment relationship?
This is where an employee is employed by one employer, but another organisation has the ability to direct or control the employee’s day-to-day work.
This is common where a parent company can direct work for employees of a subsidiary company, or in a labour hire model, or through a recruitment agency. For example:
The new legislation
The Employment Relations (Triangular Employment) Amendment Act 2019 has passed in Parliament. The Act has received Royal Assent on 27 June 2019 and will come into force on 27 June 2020.
Currently, employees can only raise a personal grievance against their employer. If an employee’s complaint is about actions of a controlling organisation, the employee cannot raise a grievance directly against that organisation.
When the new law comes into force:
- the employee will be able to raise a personal grievance directly with the employer; and
- if the employee raises a personal grievance with the employer, the employer can apply to join the controlling organisation as a third party to the personal grievance claim.
The Employment Relations Authority may apportion liability between the employer and the controlling organisation for any compensation or remedy granted to the employee for that personal grievance.
How should businesses prepare?
The long-term (and even short-term) outsourcing of employer responsibilities to temp agencies has been a contentious subject for unions and employees. The suggested solution in this new legislation is to place employer responsibilities with both the agency and user business.
Businesses should assess whether they have any situations that may be deemed to be a triangular employment relationship and, where they are the employer, ensure that the controlling organisation also complies with all requirements of being a good employer. This ensures that a personal grievance is not raised regardless of whether the business is a controlling organisation or employer. Controlling organisations need to be aware of the new risks.
For assistance with these issues, feel free to contact a member of the Wynn Williams employment team