Is a recruitment agency worker considered an employee?

The Employment Relations Authority (ERA) recently dealt with a case involving a worker's attempt to bring a personal grievance claim against a company that wasn't their direct employer.

The matter raised important questions about the jurisdiction of the Employment Relations Authority and the process for joining third parties to employment disputes.

In this case, a recruitment agency worker sought to file a claim against the company where they had been placed on assignment, alleging unjustifiable disadvantage.

The worker argued that despite not being directly employed by the company, the nature of their work and the level of control exercised over them should allow for a direct claim. They also contended that their status as a recent immigrant with limited knowledge of New Zealand employment law should be taken into consideration.

Background of the employment arrangement

The case centred around a worker who was employed on a casual basis by a recruitment agency called Agoge Limited. This agency then placed the worker on assignment at Coca-Cola Europacific Partners New Zealand Limited (CCEP) for a period of about three months, from 19 April 2023 to 13 July 2023.

The employment relationship was structured such that Agoge Limited was the worker's direct employer, while CCEP was effectively a client where the worker was placed. The worker's employment agreement with Agoge included a dispute resolution clause specifying the 90-day period applying to personal grievance claims.

After the assignment ended, the worker attempted to bring a claim against CCEP, alleging they had acted unjustifiably and caused disadvantage. However, this claim was not filed until 22 December 2023, several months after the assignment had concluded.

Worker’s claim and procedural issues

The worker lodged a statement of problem with the Employment Relations Authority in December 2023, targeting CCEP rather than their direct employer, Agoge Limited. This immediately raised jurisdictional questions, as CCEP argued the worker had not followed the proper process for bringing such a claim.

Specifically, CCEP contended that the worker had failed to meet the requirements under Section 103B of the Employment Relations Act 2000 for joining a "controlling third party" to a personal grievance claim. They emphasised that no grievance had been raised with the actual employer (Agoge) within the required 90-day timeframe.

The worker did not raise a personal grievance claim with CCEP within the 90-day period, nor did they notify CCEP that they wanted to add CCEP to a personal grievance claim as a controlling third party within this period.

Legal framework and jurisdictional issues

The case hinged on aspects of New Zealand employment law, particularly around the process for bringing personal grievances and joining third parties to such claims.

The Employment Relations Act sets out specific requirements for these processes, including:

• Personal grievances must generally be raised with an employer within 90 days
• There is a separate process for notifying and potentially joining "controlling third parties" to grievance claims
• The Employment Relations Authority has exclusive jurisdiction to make determinations on employment relationship problems

A key precedent cited in the decision was the case of Riddler v Meridian Energy Limited, where the court held:

"Before the Authority has jurisdiction to join a controlling third party there must be an unresolved personal grievance between an employer and an employee to which it can be joined."

This emphasises that the process is not designed to create a separate cause of action against third parties, but rather to incorporate them into existing disputes between workers and their direct employers.

Personal grievance claim

CCEP argued that the Authority lacked jurisdiction to hear the worker's claim. They contended that:

• There was no unresolved personal grievance claim between the worker and Agoge (their actual employer).
• The worker had not raised a grievance with Agoge within the required 90-day period.
• There were no existing proceedings to which CCEP could be joined as a controlling third party.

In response, the worker argued that the Authority did have jurisdiction to hear their personal grievance claim directly against CCEP. They suggested the Authority should consider factors like control and integration of the work carried out at CCEP.

The worker also contended that exceptional circumstances should apply due to their status as a recent immigrant and lack of knowledge about New Zealand employment law. However, the Authority noted that no formal application for an extension of time had been made under the relevant section of the Act.

The Authority's decision

Ultimately, the Employment Relations Authority determined that it did not have jurisdiction to consider the worker's claims against CCEP. The Authority's member explained:

"There is no employment relationship between [the worker] and [the employer]. [The worker] is not able to raise a personal grievance with, or a claim against, [the employer]. There is no basis for a proceeding to be commenced by [the worker] against [the employer] directly."

This highlights the fundamental issue with the worker's approach – they were attempting to bring a claim against a company that was not, legally speaking, their employer.

The Authority further emphasised:

"[The worker] also failed to raise a personal grievance against [their] employer, [the recruitment agency], within 90 days. [Their] failure to do so means [they are] unable to pursue a claim against [the employer] as a controlling third party. The ability to join a third party is not a mechanism which allows the employee to sidestep involving his or her employer under the Act."

This underscores the importance of following the proper procedural steps when bringing employment grievances, particularly in situations involving multiple parties or working arrangements.

Finally, the Authority concluded:

"For these stated reasons, there is no basis for [the employer] to be joined to a proceeding as a controlling third party. As a result, the Authority does not have jurisdiction to investigate [the worker's] claims."

This decision effectively ended the worker's attempt to bring a claim directly against the company where they had been placed on assignment.