Triangular Employment – Key Issues and Developments for Businesses

Triangular employment remains a significant and under-managed risk area for New Zealand employers and businesses that engage labour-hire workers, secondees, or outsourced staff. 

Since the introduction of the Employment Relations (Triangular Employment) Amendment Act 2019, businesses that are not the formal employer can still face personal grievance liability where they exercise control over a worker.

Recent Employment Relations Authority (‘the Authority’) decisions confirm a continued willingness to join host organisations to employment disputes, reinforcing that liability turns on practical control, not contractual labels. 

Triangular Work Arrangements

A triangular employment arrangement exists where:

• An employee is employed by one entity (the employer of record); but
• Works under the direction, supervision, or control of another organisation.

Common examples include:

• Labour-hire and agency arrangements.
• Secondments.
• Outsourced services delivered on-site.
• Project-based or specialist placements.

Triangular Legal Framework

A third party may be joined to a personal grievance where it:

• Has an arrangement under which the employee works for its benefit, and
• Exercises, or is entitled to exercise, control or direction similar to an employer.

Operational integration and day-to-day work management, including directing a worker to perform work is enough to trigger obligations in this area. 

Case Law Trends

Recent decisions, including by the Authority in this area continue to show willingness to join host-organisation to employment disputes where their actions contribute to a personal grievance and particular scrutiny regarding site removal decisions (triggering unjustified dismissal claims).

Key Risk Areas for Employers

Removal From Site

Requests by a host organisation to remove a worker frequently led to shared liability where termination follows.

Performance and Conduct Management

Host involvement in performance discussions, warnings, or policy enforcement increases exposure.

Misalignment Between Contracts and Practice

Commercial agreements do not protect against liability where day-to-day control tells a different story.

Relationship Breakdown

Disputes often escalate into multi-party litigation, increasing cost and complexity for all involved.

Apportionment of Liability

Where a controlling third party is joined:

• Remedies may be apportioned between the employer and the host.
• Liability is assessed based on relative contribution.
• Host organisations may face unexpected financial exposure.

Key Takeaway

Triangular employment arrangements create shared risk. Businesses that exercise control over workers may also share liability for employment outcomes, including being joined to personal grievance disputes.

Core Message: If you control the work, you may be treated as part of the employment relationship and face liability where your business’s actions contribute to a personal grievance claim, despite there being no direct employment relationship. 

This article is provided for general information only and does not replace professional advice. Employers should seek advice specific to their circumstances from Employer Pro if in doubt on their matters involving triangular employment issues, controlling third-party liability and associated legal disputes. Employer Pro has a range of employer focused resources and services available through our competitive Employer Protection Packages.

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