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Triangular employment

1 July 2020

A triangular employment relationship is a type of employment arrangement where employees are employed by an employer, but are placed with a third party who typically exercise control or direction similar to that of an employer.

This type of arrangement is most commonly adopted by recruitment agencies whereby the agency (employer) employs a person to work for a third party (controlling third party).

Whilst largely under the control of the third party, an employee in this type of relationship is currently unable to raise a personal grievance against a controlling third party.

What is changing?

The Employment Relations (Triangular Employment) Amendment Bill which came into force on 28 June 2020 will make it possible for parties in triangular relationships to join a third party to an existing personal grievance claim.

Under the new law, both employees and employers in these types of relationships will have the ability to apply to join a controlling third party to a personal grievance claim.

How will it work?

For an application to join a controlling third party to a personal grievance claim the following must be satisfied:

  • That there is an arguable case that the third party is a controlling third party;
  • That the controlling third party’s actions caused or contributed to the personal grievance; and
  • The controlling third party was advised of the personal grievance within 90 days, being the current standard timeframe for raising a personal grievance against an employer.

What effect will this have?

With the scope of a personal grievance set to be widened to include controlling third parties that for the most part are responsible for the day to day activity of employees in these relationships, the law change comes as a welcome relief.

Consequently controlling third parties in triangular relationships may now be liable to contribute to remedies arising out of a personal grievance claim.

Therefore, now would be a prudent time for parties who typically engage in triangular employment relationships to review current contractual arrangements in preparation of this upcoming law change.

If you have any queries about this upcoming law change or any other employment queries please do not hesitate to contact one of our employment team members.