TRIANGULAR RELATIONSHIPS ARE LAW

 

Human, Black White, Hands, Triangle, Finger, Protect

 

Effective as of the 27 June 2020 the Employment Relations “Triangular Employment” Amendment Act 2019 came into place bringing with it a number of new responsibilities and liabilities for those employers who may engage ‘contract’ labour.

In Part 1 of this series we looked at the context of the Triangular Relationship identifying who the ‘Host’ or ‘Controlling Third Party’ was and where potential liabilities may occur under the new legislation. Within Part 2 of this series we will now focus on step’s “host” organisations will need to make to mitigate these liabilities.

 

Part 2: Mitigating Liability

The new legislation enables an employee of a labour hire or temping agency to ‘join’ the host organisation to their personal grievance claim, for actions allegedly occurring against them while working under the control of the host, even though the host is not their employer.

The process of this is:

  1. The employee must raise a personal grievance against their employer within 90 days of the date on which the alleged incident is said to have occurred; and then,
  2. The employee must, within 90 days of raising the above grievance, notify the ‘host’ of their view that the hosts actions/or inactions contributed to the employee’s personal grievance.
  3. The employee must then, within a Statement of Problem to the Employment Relations Authority (ERA), apply to join the host party to the personal grievance claim against the primary employer.

 

If the ERA accept the employee’s application they may then direct all three parties to attend mediation, and if the matter is not amicably resolved, the ERA may reach a determination whereby they may award damages (lost wages, compensation and costs) against the employer and the host in a manner that reflects the extent to which both parties contributed to the grievance.

To avoid being in a place where a successful grievance could be pursued by the ‘contracted/temp’ employee, a number of changes to the engagement/management process will be required, including:

 

  • Model of Engagement

As a liability can be created due to the decision of a host to no longer have the employee on their premises the engagement agreement with the ‘provider’ organisation for each employee should take the form of a short-fixed-term agreement – possibly no more than two (2) weekly increments – renewable at the sole discretion of the host.

If a problem arises with the contracted employee, the issue will be able to be resolved by the coming to end of the ‘period’. This would significantly reduce any lost of earnings claim against the host.

 

  • Model of Management

If an issue arises (performance or behaviour) with the contracted employee during the period of engagement the host should raise a complaint with the ‘provider’ and should hold an expectation that the provider would then apply a procedurally fair process to address the concern (i.e. conduct an investigation, implement a disciplinary process or commence a performance management process).

 

It is the responsibility of the provider to manage such processes with the provider, not the host, then being liable for the manner in which this is undertaken.

Traditionally, host organisations have been subject to the contractual ‘lease’ agreement of the provider organisation when seeking to engage contract or temp staff. However, due to the increased liabilities associated with continuing to engage such individual’s in the future, we strongly recommend that the host has their own document, in addition to the lease agreement, whereby the provider becomes subject to key management responsibilities over and above the core terms. This would then provide a higher degree of protection for the host in any subsequent future claims.

If you would like to discuss the content and form of the recommended engagement document or have other questions in relation to this new legislation, please feel free to contact us directly.

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