Labour hire arrangements: ERA clarifies control in workplace

The Employment Relations Authority (ERA) recently dealt with an employment relationship issue where a temporary worker claimed her assignment ended prematurely after she reported bullying concerns to management.

She sought to hold both her labour hire employer and the client company accountable for what she believed was an unjustified dismissal.

The case raised important questions about who bears responsibility when temporary workers face workplace issues. It challenged traditional employment boundaries and sparked discussions about the obligations of companies that use labour hire services.

Labour hire control in workplace safety

The client company employed around 350 people throughout New Zealand and regularly used labour hire companies to meet seasonal demands. The Auckland-based labour hire company supplied temporary workers who were employed under individual employment agreements and paid directly by the labour hire company.

The temporary worker started her assignment on September 17, 2023, after completing an induction at one of the company's Auckland sites. Her employment agreement specifically outlined that each assignment was separate and once completed, the employment relationship would end unless another assignment was agreed upon.

The terms and conditions between the labour hire company and the client business required specific details before any worker started, including work descriptions, location, hours, and health and safety procedures.

Labour hire control during work hours

During her assignment, the worker reported to the night shift supervisor at the client company. She said she experienced bullying from another temporary worker and raised these concerns multiple times, including through a text message on September 27, 2023.

The night shift supervisor arranged a meeting between both workers. According to his evidence: "to talk to them to make sure they were okay working together. They seemed to be all right, and went to do their work in the bin room."

However, the following day, the worker's assignment ended. The night shift supervisor explained: "I didn't need as many workers ... so I had to tell [the labour hire company] to send two fewer people. I decided that I didn't need [the worker] and one other."

Control over the worker’s daily tasks

A key issue was determining who actually controlled the worker's daily activities. The worker stated in evidence: "I reported directly to [the supervisor] at [the company] daily and it was [the company's] management that inducted, supervised, instructed, and trained me."

The production manager at the client company provided evidence about their role with temporary staff, stating they ensured health and safety compliance, allocated tasks, and supervised work. The manager noted that if requirements weren't met, they would "simply advise [the labour hire company] that the particular person is no longer required."

The evidence showed that the client company maintained substantial oversight of temporary workers' activities, including providing PPE and task instruction.

The ERA’s decision

The ERA examined previous cases to determine whether the client company exercised enough control to be considered a controlling third party under the Employment Relations Act 2000. They referenced the Prasad v LSG Sky Chefs New Zealand Limited case, which noted: "[workers] operated with no degree of autonomy. Rather [the employer] exercised a significant degree of direction and control over the [workers'] day-to-day work – what, when, where, how and by whom."

The Authority emphasised that when examining such arrangements, they must look at "the way in which arrangements are structured, particularly where there is a deficit of bargaining power, and how such arrangements have operated in practice."

The ERA ultimately found that it was "[the employer's] dissatisfaction with her performance and conduct which resulted in the cessation of her assignment," determining that the client company exercised sufficient control to be joined as a controlling third party to the proceedings.