Important legislative changes for organisations that use labour hire workers
The Employment Relations (Triangular Employment) Amendment Act 2019 (the Act) received royal assent on 27 June 2019. The Act’s provision will take effect on 27 June 2020, or a date appointed by the Governor-General by Order in Council, whichever is earlier.
The Act will mean that organisations who source and contract workers through labour hire companies could be liable for grievances raised by those workers, even though there is no contract of employment between the two parties. Its provisions allow the Employment Relations Authority or Employment Court to join a party to personal grievance proceedings, where that party benefits from the labour of another organisation it has engaged, and where it exercises control or direction over the labour hire workers, akin to that of an employer.
A labour hire worker will be able to pursue a personal grievance against the labour hire organisation of which it is an employee, and in certain circumstances against an organisation which he/she has been placed to provide labour (host).
Previously, this was not the case. Host organisations could operate in relative comfort that they wouldn’t be considered the employer of workers provided by a labour hire organisation. Those labour hire workers were generally restricted to pursuing a personal grievance against the labour hire organisation only, given there was no employment relationship (in a traditional sense) between the labour hire worker and the host.
This issue was acknowledged in a landmark case that came before the Employment Court in 2017, in the form of two labour hire workers who claimed they were employees of the host organisation of which they were placed, asserting that the “real nature” of their relationship was of an employer/employee between the workers and the host organisation.
The Court ruled in the workers favour, emphatically stating:
“A labour-hire arrangement does not represent an impenetrable shield to a claim that the “host” is engaging the worker under a contract of service. Much will depend on the particular facts of the individual case and an analysis of the real nature of the relationship, including how it operated in practice.”
Following the Court’s decision, a Members’ Bill was introduced to Parliament by Labour MP Kieran McAnulty, culminating in the Act now passed into law.
If your organisation uses labour hire workers we suggest you get in touch for advice, before the provisions of the Act take effect.