Landmark employment case could set precedent

A recent Employment Court decision could radically change the employment landscape for businesses using agency temps, according to Sarah Townsend, an employment law specialist at Duncan Cotterill.

In a landmark decision, the Employment Court has signalled that it is possible for workers to be employed not only by the agency placing them, but also by the business in which they were placed.

“This is the first decision of its kind in New Zealand and opens the door to the possibility of temporary agency workers bringing personal grievance claims against businesses in which they are placed,” Townsend said

“The decision has potentially wide ranging consequences for businesses who use agency temps. It means they could effectively be the employers of the agency temps, which is the very thing they are often trying to avoid.”

Townsend said that under the status quo, workers are generally employed directly by an agency.

“The purpose of this arrangement from the business’ perspective is often to avoid directly employing these workers. When the work dries up, the placement comes to an end, or if the worker is simply unsuitable, the business can instruct the agency to replace or remove them.”

In McDonald v Ontrack Infrastructure Ltd, Mr McDonald had a written casual employment agreement with Allied, a labour hire company that provided workers to clients to cover temporary work requirements. Ontrack was one of those clients. Allied and Ontrack had a formal contractual arrangement for the supply of temporary workers.

Mr McDonald claimed that while his written casual employment agreement with Allied remained, sometime after he started his placement with Ontrack, an additional, implied, employment agreement came into existence between him and Ontrack. Mr McDonald argued that meant he was able to bring a personal grievance for unjustifiable dismissal against Ontrack when his placement there ended. Both Allied and Ontrack refuted that Mr McDonald was ever employed by Ontrack.

Townsend said the Employment Court held that it was possible for Mr McDonald to have been employed by Ontrack and, therefore, be able to pursue his personal grievance.
However, the issue is still not straightforward:

• The onus is on Mr McDonald to establish that he was an Ontrack employee.
• The court must look at the “real nature of the relationship” and consider all relevant matters to determine whether Mr McDonald was an employee of Ontrack. The enquiry is an intensely factual one.
• Contractual documents entered into at the start are important, but not determinative of the issue of whether or not Mr McDonald was an Ontrack employee.
• It is possible for there to be an “implied contract” of employment, established by implication from the parties’ overt conduct.

“Mr McDonald still has a way to go before he can pursue his personal grievance against Ontrack. The Court has yet to decide whether, on the particular facts of this case, he is an employee of Ontrack. A second hearing will be necessary for all of the facts to be presented to the Court, ” Townsend said.

ENDS

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