The Employment Relations (Triangular Employment) Amendment Bill (Bill) was introduced in February this year. It seeks to give labour-hire workers and those in similar situations a number of the same workplace rights as full time employees.

The aim of the Bill is to strengthen the employment rights of employees who are employed by one business or organisation (a primary employer) but work under the control and direction of another business or organisation (a secondary employer). This three-party employment situation is known as triangular employment.

An example of triangular employment would be a labour-hire agency who contracts the services of its employees to other businesses. These businesses pay a fee to the agency to cover the cost of the workers services (plus a profit margin for the agency). The agency then pays the worker, who agrees to perform services for the other company.

This member’s bill was introduced by Labour MP Kieran McAnulty, and has passed its first reading in the House with support from Labour, NZ First and the Greens.

What are the potential changes?

The Bill proposes two important changes to the Employment Relations Act 2000. First, employees in triangular employment will automatically be bound by any collective agreement in the workplace of their secondary employer. Second, those employees will be able to raise a personal grievance against their secondary employer.

Collective agreement

The Bill rescopes the application of collective agreements to include employees in triangular employment situations. If enacted, collective agreements would automatically cover labour-hire employees where they are performing work covered by the collective agreement. The only requirement would be that the employees are members of the union that negotiated the collective agreement, and that they are not bound by any other collective agreement.

This proposed law change would, in all likelihood, disrupt the cost model of the labour-hire company placing temporary labour into a client’s workplace, as well as impact the cost for the client making use of the labour-hire arrangement.

Personal grievances

The Bill outlines a new personal grievance process to allow an employee working for a secondary employer to raise a personal grievance in certain circumstances against that secondary employer as though it was their primary employer. The courts “must” grant leave to join in the secondary employer, if the actions of the secondary employer appear to have contributed to the grievance.

Where a secondary employer is joined to a personal grievance claim the Bill provides that the actions of the secondary employer are deemed to be the actions of the labour hire company.

Tight timeframe for submissions

The Bill is currently at Select Committee and is due to be reported back to the House in September. The deadline for submissions to the Select Committee is 11 May 2018.

The Bill’s sponsor, MP Kieran McAnulty, has said he is aware there were concerns from the labour-hire industry about the Bill’s wording and how it could negatively affect good companies that were playing fair. But getting the Bill through its first reading would allow those issues to be thrashed out and a solution found, Mr McAnulty said:

“I’m not emotionally attached to the particular wording of the Bill but I have become emotionally attached to the issue.”[1]

Unfortunately, despite this clear signal that the Bill will benefit from debate, the time for filing submissions is tight (11 May 2018).

We understand that a key motivation for the Bill may be an attempt to prevent migrant exploitation through third party labour-hire - which is important to address as an issue. However, we consider the proposed automatic transfer of labour-hire employees on to collective agreements would be a draconian measure, that would remove the flexibility obtained through these arrangements, which often are for short-term cover for production peaks and troughs, etc.

The Bill in its current form, would have significant implications for the NZ labour-hire model and would benefit from greater consideration during Select Committee stage. We would be happy to assist you with filing submissions with the Select Committee.