Select Committee reports back on the ‘Triangular Employment’ Bill

The Education and Workforce Committee (the Committee) has released its report on the Employment Relations (Triangular Employment) Amendment Bill (the Bill), recommending that it be passed with certain amendments.

The Bill aims to clarify the employment rights of employees that are employed by one organisation but under the control and direction of another. This arrangement is known as ‘triangular employment’ and is common in the labour hire sector.  New Zealanders working under triangular employment arrangements represent a significant and growing part of the workforce.

As originally introduced, the Bill sought to give employees working under a triangular employment arrangement the right to:

  • raise grievances against both the employer of record and the third party entity who had engaged the employer for the employee’s services; and
  • coverage by any collective agreement applying to the employees of the third party entity.

Proposed changes

The changes the Committee has proposed provide clarity to a system that might otherwise be difficult to navigate.

Of note, the Committee has recommended changing the terms “primary employer” and “secondary employer” to “employer” and “controlling third party”, respectively. These changes make clear that the latter party does not technically employ the employee (rather, they exercise control or direction over the employee in a manner equivalent to that which would normally be expected of an employer).

The Committee also proposes to do away with the collective agreement provisions, whereby employees would be bound by the same collective agreement as the employees of the controlling third party. The Committee considered that these provisions would add unnecessary complexity to labour hire arrangements, particularly in situations where an employee worked for multiple controlling third parties.

A third major change proposed relates to the process for raising personal grievances. The Committee’s amendments would make it easier for a controlling third party to be joined to proceedings, set out the timeframes and notification requirements for bringing proceedings, and define more clearly what remedies the court may award.

We will be keeping a close eye on the progress of this Bill through Parliament. If you have any questions about the Bill and how it might impact your organisation, please get in touch with one of our experts.

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