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Dismissing Temps

Published 03 Jun 2024

What is a Temp worker?

A 'temp worker' generally refers to a situation where an employee is employed by a labour-hire agency and assigned to a host business. However, the labour hire "agency" is the workers employer, but the host business directs the employee's day-to-day work like any other employment relationship, and the work is usually performed at the host businesses workplace. The host pays the agency's fee, or invoice for the work the employee performs which covers the employee's wages and a profit margin.

Such temp work, often termed 'assignments' by the agency are usually documented in a written employment agreement that references the specific assignment details. It is common practice that upon the completion of an assignment, then the employment relationship is often terminated immediately by the agency.
Recruiting, temping, and labour-hire agencies often classify employment relationships with their employees as either fixed-term or casual. However, these classifications often inaccurate, and in some circumstance unlawful. Many employees ('temp workers') work long and regular hours for extended periods - sometimes exceeding the expected duration of an assignment. These relationships are often not genuinely casual or fixed-term, despite what is stated in the employment agreement. According to Section 6 of the Employment Relations Act 2000 ('the Act'), the Employment Relations Authority and the Employment Court have the authority to determine the true nature of the employment relationship in terms of how it operates between the parties - the key risk being the employment institutions can infer a permanent employment relationship despite the label of any agreement to the contrary.

Aside from inaccurate employment agreements, issues in this area can also get contentious if an employee is given their marching orders, i.e. dismissed from their host business. If a host decides for any reason they no longer want this particular worker they often simply call up the agency and request that they be removed with little or no notice. This can leave the agency with a very immediate problem if they have no other available assignments for their employee. A termination with little or no justification and no process may very quickly result in a potentially successful personal grievance and more importantly the host may also find themselves being joined to a subsequent employment dispute for the reasons explained below.

Triangular Employment Amendment Act 2019

The Triangular Employment Amendment Act 2019 came into effect on 27 June 2020 and defines a “controlling third party” as being:
(a) a person who has a contract or other arrangement with an employer under which an employee of the employer performs work for the benefit of the person; and
(b) a person who exercises, or is entitled to exercise, control, or direction over the employee that’s similar or substantially similar to the control or direction that an employer exercises, or is entitled to exercise, in relation to the employee.

This legislation recognises the clients, or businesses of labour-hire agencies as "controlling third parties" and makes them accountable for personal grievance claims in certain circumstances.

While temporary labour-hire employees have always had rights and protections under the Employment Relations Act 2000, including the ability to raise personal grievance claims - the Triangular Employment Amendment Act allows this category of employees to join a "controlling third party" to their legal claims and seek remedies e.g. compensation for humiliation and loss of earnings from the controlling third party due to their actions or inactions.

Terminating a Temp

When a temporary employee’s employment is terminated and there are grounds to challenge the dismissal and the employee can raise a personal grievance for unjustified dismissal with the labour-hire agency within the statutory 90-day time frame (12 months for sexual harassment claims). If the employee believes that the actions of a controlling third party, typically the host business, contributed to their claim and subsequent personal grievance, they must also notify this third party within the time period.

If the labour-hire agency receives a personal grievance from an employee and determines that the actions of the controlling third party contributed to the grievance, then the agency as the employer can notify the controlling third party within 90 days of receiving the grievance (assuming the employee has not already done so). This notification effectively holds the controlling third party accountable - it potentially requires them to address the grievance and be joined to legal proceedings in the event the claims cannot be resolved.

In cases where the controlling third party is unwilling to participate in resolving the personal grievance, either the employee or the labour-hire agency can apply to the Employment Relations Authority to include the controlling third party in the proceedings. This action is facilitated under Section 103B of the Triangular Employment Amendment Act, which ensures that all relevant parties are brought to the mediation table to work towards a resolution, or answer to the Employment Relations Authority in the event claims cannot be resolved.

If a resolution cannot be reached through mediation, as usual, the Employment Relations Authority will proceed to hear and determine the matter. This process ensures that all parties involved in the employment relationship, including the controlling third party can be held accountable for their actions and contributions to any personal grievances raised by the employee.