Triangular Employment Relationships

Joining controlling third parties to personal grievance claims

The Employment Relations (Triangular Employment) Amendment Act 2019(Act)came into force on 27 June 2020.  The Act has far reaching implications for employers who use labour-hire companies.

Triangular employment arrangements arise where an employee is employed by an employer, but carries out work for a “controlling third party” who exercises, or is entitled to exercise, control or direction over the employee in a manner similar to that of an employer.

An obvious example of a controlling third party is a labour-hire company. However, it also applies to a situation where an employee is contracted out (seconded) to another business or organisation. 

Previously, employees could only bring a personal grievance against their employer.  The legislative change now broadens the ability for the employee, the employer or both, in a triangular employment relationship to apply to the Employment Relations Authority or the Employment Court to join the controlling third party to the personal grievance claim.  It is imperative that the controlling third party is put on notice within the standard 90-day period that it caused or contributed to the personal grievance.  The Authority or the Court may also, at any stage of the proceedings, of its own motion join a controlling third party to the proceedings. 

The Authority or the Court will join the controlling third party to a personal grievance proceeding if it is satisfied that an arguable case has been made out.  The Authority or Court must be satisfied that (a) the party to be joined to the proceedings is in fact a controlling third party; and (b) its actions caused or contributed to the personal grievance.  If the employee’s personal grievance claim is successful, remedies will be apportioned against the employer and the controlling third party in a way that reflects the extent to which the actions of each contributed to the situation that gave rise to the personal grievance.

Given the far reaching implications, it is timely for employers to consider the implications of utilising this employment structure and its ability to apportion liability by joining third parties to the proceeding they are defending.

If you have any questions, or you need personalised advice, please contact our Employment team.