Triangular employment is a situation where an employee of an employer (such as a labour hire company) works for another employer (such as a manufacturing company). In many such situations, the employer controlling a person’s work is not that person’s employer. This causes some people to conclude there is a relationship between three parties; hence the “triangular” description.

The Employment Relations (Triangular Employment) Amendment Bill is before a Select Committee.  Note that this is a private member’s Bill and not Labour policy. Its aim is to give those persons employed by one employer (the primary employer) but under the control of another employer (the secondary employer) greater employment rights.  There are two stated purposes.

• The first is to enable employees of a primary employer access to the terms and conditions of any applicable collective agreement of their secondary employer, including pay rates, hours of work and redundancy compensation. 

• The second is to give an employee who raises a personal grievance against their primary employer, the opportunity to add the secondary employer to the action.  This is not automatic and requires approval by the Employment Relations Authority or the Court.

Secondary Employer

A secondary employer for the purposes of this amendment is one “that exercises, or is entitled to exercise control or direction over the worker equivalent or substantially equivalent to that which would normally be expected of an employer”.

If the employer contracting a person through a labour hire company exercises a high degree of control over that person, or is entitled to do so, it is likely they will be the secondary employer of that person. 

On the other hand, if the person is simply engaged to complete certain tasks and is largely responsible for their own work (or is supervised by the labour hire company), then it is likely the employer contracting that person will not be a secondary employer.

What to do?

• This Bill is not yet law. By the time you read this, we should have a better idea of the Select Committee’s views and the chances of the Bill passing.

• If you engage labour hire employees, particularly where those employees have been in your business for a long period, bells should start ringing.

• You should seriously consider reducing your level of control over labour hire employees, or perhaps replacing them with direct hire employees.

• The future cost of labour hire employees may make their use uneconomical.

• Direct hire employees can still provide significant flexibility if they are employed on a casual, flexible part time or temporary basis. Labour hire workers could then be limited to situations where there is a sudden and/or short-term need.