New protections for employees in triangular employment situations


'New protections for employees in triangular employment situations' was originally published in the Marlborough Chamber of Commerce Voice Magazine - Issue 03.

The Employment Relations (Triangular Amendment) Bill received Royal Assent in June of this year, and will come into force on 27 June 2020. In an area like the Top of the South where a number of employers employ staff under this arrangement, there are some key changes to be aware of.

What is three-party employment?

A three-party employment situation is where employees are employed by one business or organisation but work under the control and direction of another business or organisation, known as “triangular employment”.  An example of triangular employment is a labour-hire agency who contracts the services of its employees to other businesses.

Industries that need to be aware of the impact this will have on their policies and processes for managing performance and disciplinary issues, include:

  • Those involved in labour hire arrangements
  • Sectors affected by seasonal fluctuations
  • Those who hire a temporary workforce


Consideration will also need to be given in situations where employees are placed on secondment to another organisation.

What are the important changes employers in triangular employment situations need to be aware of?

The most significant amendments relating to triangular employment are regarding the Personal Grievance (PG) process.

Under the new legislation, an employee working for a third party employer will be allowed to raise and join a personal grievance claim against their third party employer as though it was their primary employer. Employers will also have the option to apply to the Employment Relations Authority to join the controlling third party to a personal grievance proceeding they are facing.

In scenarios where it is deemed a personal grievance to be substantiated, consideration will be given to the extent, that both the employer and the controlling third party caused or contributed to the personal grievance in apportioning any award for reimbursement for lost wages and the payment of any compensation for hurt and humiliation and/or the loss of any benefit.

What do I need to do?

Without a doubt, these changes present employers and third parties with some unique and challenging dynamics to consider moving forward. Continuing healthy and robust commercial relationships in triangular employment scenarios will need to factor in agreement around key basic ‘employee rights’.

While next June may seem a while away, and for many employers the current season isn’t driving increased demand for labour, employers will need to start looking at their internal HR processes and policies to ensure they are compliant, in place and understood when the amendment bill comes into force.

For further information and advice on what you need to do, please contact one of our HR Partners.

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