Recent ERA case redefines workplace authority in labour-hire arrangements
The Employment Relations Authority (ERA) recently examined whether a vessel owner could be considered a controlling third party under New Zealand employment law in relation to workers hired through a labour-hire company.
A second officer raised personal grievances after his employment ended due to a new vaccination requirement. The case questioned whether both his direct employer (Kingston Offshore Services Limited) and the vessel owner (MMA Offshore Limited) could be held responsible for decisions affecting his employment.
The dispute centered on multiple legal questions: whether the vessel owner was a controlling third party, whether grievances were raised within the required 90-day timeframe, and whether the vessel owner received proper notification of these grievances.
The worker was employed by a labour-hire company as a second officer on the MMA Vision vessel from June 2021 until September 2022, when his employment ended due to the vessel owner's COVID-19 vaccination requirement.
The worker raised claims of discrimination on the basis of health, unjustified action, breach of contract, unjustified dismissal, and breach of good faith related to the vaccination requirement and his dismissal.
The labour-hire company and vessel owner argued that the labour-hire company alone was the employer, and the vessel owner was not a controlling third party under section 5 of the Employment Relations Act 2000.
The Authority examined the Agency Agreement between the parties, which stipulated: "All seafarers shall remain employees or subcontractors of [the labour-hire company]" and "[the labour-hire company] shall instruct all seafarers to obey the orders of [the vessel owner]."
The Court had established in Prasad v LSG Sky Chefs New Zealand Ltd: "Much will depend on where a particular case sits on the spectrum... It becomes increasingly likely that an employment relationship will be found to exist where the documentation is non-existent or unclear; the work is of indefinite duration... a significant degree of supervision, control and direction is exercised by the host."
The worker's correspondence demonstrated the overlapping authority, writing to the vessel owner: "I have been serving on for over a year. My employer has decided no redeployment opportunities are available and declined to work with me regarding my situation."
The Authority considered whether the vessel owner met the definition of a controlling third party under section 5 of the Employment Relations Act 2000, which requires both a contractual arrangement for work and exercise of control similar to an employer.
The Court in Pilgrim v Attorney-General had established: "Identifying the true employer is an intensely factual exercise... it is well established that form and reality may diverge, particularly in employment relationships. It is reality which must be discerned."
After examining the evidence, the Authority found the worker was employed solely by the labour-hire company, but this didn't prevent the vessel owner from being considered a controlling third party.
The Authority determined that the vessel owner's control over the labour-hire company's employees met the requirements for a controlling third party under the Act, stating: "I consider the extent of control [the vessel owner] had over [the labour-hire company's] employees, including [the worker], is sufficient to meet the requirements."
Correspondence showed the vessel owner's "directive is that all personnel who sail on an [vessel owner's] vessel must be fully vaccinated and encouraged to get a booster shot when eligible." The Authority found this direction to the labour-hire company demonstrated how the vessel owner's actions contributed to the worker's grievance.
The Authority granted the worker's application to join the vessel owner as a controlling third party to his unjustified dismissal claim. An Authority Officer would contact counsel to arrange a case management conference for investigating the worker's substantive personal grievances, noting that claims of discrimination and standalone unjustifiable disadvantage were not raised within the required 90-day period.
