Triangular employment and labour hire dismissals in NZ: who is liable?
Labour hire temp recruitment agencies and their clients can both become liable for unfair dismissal under the new Triangular Employment legislation.
Labour hire and recruitment agency work is often treated as "easy to end". In reality, dismissals in triangular employment still require justification and a fair process, and in some cases both the agency and the host business can be held responsible.
Key takeaways
- Contract wording is not decisive: a clause saying the assignment can end at any time does not override NZ employment law obligations.
- Process still matters: notice, information, time to respond, and genuine consideration.
- Host involvement matters: if the host effectively controls the work and drives the termination, it can be brought into the claim.
Temping Agencies
Labour hire contracts often say that the temporary assignment can end at any time. This is not lawful in NZ employment law as it attempts to contract out of the Employment Relations Act 2000 Good Faith and Justification requirements that an employer must follow.
Labour hire temp agencies and their clients can both become liable for unfair dismissal. The Triangular Employment Amendment Act 2019 allows an employee to take both the temp agency (the employer) and the controlling third party (the host) to the Employment Relations Authority and Employment Court to seek remedies for their losses.
Temp Agency Dismissal
What a temp or labour hire agency must do before terminating an employee's employment:
- A fair and reasonable process must be undertaken.
- Provide relevant information.
- Give the employee an opportunity to comment.
- Genuinely consider the employee's response.
- The decision to dismiss must be substantively justified.
If an employer and/or the controlling third party cannot justify dismissal, the employee will become entitled to compensation for hurt, humiliation, loss of dignity and injury to feelings as well as reimbursement of lost wages. If the decision has come from the controlling third party (the host) where the employment is to be terminated the employee is able to include them as being answerable to the unfair dismissal claim.
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We write for the Deals on Wheels magazine. Read our full article:
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