Will the real employer stand up? Labour Hire Workers. Employment Lawyer. Dukesons Business Law.

February 2018

This Blog isn't legal advice – if you need legal advice on any employment law or other business law or commercial law issue, please contact me. I'm an employment lawyer and business lawyer in Auckland who provides advice on a wide range of business law or commercial law issues.

As clients of mine will know who have consulted me on employment or contractor matters, issues can arise as to whether a worker is an employee or an independent contractor, regardless of their having signed an independent contractor agreement. A recent case considers this issue in the context of the provision of workers to third parties by labour hire companies.

In the case, SP, a labour hire company provided workers to LSG. SP contracted with LSG for the workers to perform work for LSG.

The Employment Court found that LSG and the workers were in an employment relationship. There were various reasons for this including:

  • the degree of control that LSG had over the workers,
  • the longevity of the relationship,
  • the nature of the relationship - the workers expected to be given work and LSG expected the workers to perform the work personally,
  • LSG usually contacted the workers directly,
  • LSG treated the workers pretty much the same as it treated its employees (except that labour hire workers were paid less).

So, in some cases, third parties who contract with labour hire companies to provide workers may find that they are regarded as employing the workers. Much will depend on the circumstances and in some cases, workers may have a strong desire not to be employees e.g. some medical workers, including doctors and surgeons, may want the flexibility of being contractors.

A new Members' Bill was introduced to Parliament - The Employment Relations (Triangular Employment) Amendment Bill has two primary purposes. One purpose of the Bill is to give “labour hire” employees the right to join the third party to a personal grievance claim against labour hire company where the PG has also been raised with the third party. A third party would be deemed to be an employer of the worker if it "exercises or is entitled to exercise control or direction over the employee equivalent or substantially equivalent to that which would normally be expected of an employer". This could catch short term deployments as well as longer term deployments e.g. “temps”.

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Telephone: +64 9 379 4556 Mobile: 021 404 306. Fax: +64 9 379 4557 Email: steve@dukesons.co.nz