Joint employment in New Zealand: can an employee have multiple employers?

Traditionally, employers have been able to carefully structure their businesses using companies, groups of companies and other entities, to protect from, or minimise, potential employment liability. However, there have been several law changes in recent years that have muddied the waters and made it more difficult for employers to use their company structure as a “shield” against employee claims.

One of these changes has been the recognition of the concept of joint employment in New Zealand. That is, the idea that an employee can be employed by multiple entities at the same time.

What the courts say about joint employment

Key case law developments

In E Tū Incorporated v Raiser Operations BV [2022] NZEmpC 192, the Employment Court did not exclude the possibility of joint employment in New Zealand and referred to its earlier decision in Orakei Group (2007) Ltd v Doherty [2008] ERNZ 345.  In the Orakei Group Case, it was found that two associated entities, within the same group, jointly employed the claimant and, therefore, each owed the claimant employment obligations in a redundancy context. In that case, the Employment Court said that what was needed to establish joint employment was “a sufficient degree of relationship between the legal entities” and that, when assessing that relationship, the Court would look for “the element of common control”.

Since then, Uber successfully sought leave to appeal the Employment Court’s finding that joint employment may arise simply due to a number of entities being connected and exercising common control over an employee. Unfortunately, however, Uber abandoned this aspect of its appeal, meaning that we did not get to hear the Court of Appeal’s thoughts on the matter.

The most recent ruling

Most recently, in Courage v Attorney-General [2024] NZEmpC 222, the Employment Court explicitly confirmed that it was possible for an employee to have joint or multiple employers and noted that this situation was likely to become more common, as we move toward different, more flexible ways of working. The Court also noted that joint employment was more likely to arise in the context of “complex, interrelated business structures”.

Despite these cases, the law is far from settled when it comes to joint employment in New Zealand and many unknowns remain. In particular, it is not yet clear what degree of control is required to meet that threshold.

International approaches to joint employment

In the United States, where joint employment is widely recognised, the test is whether the alleged joint employers have the authority to exercise control over essential terms of employment, not whether that control is actually exercised. In other words, it is enough that an entity could exercise control over the employee if it wanted to, even if it does not do so in practice.

In Canada, however, there tends to be more of a focus on actual control, at least compared to the United States.

Regardless of what test is adopted in New Zealand, the implications are likely to be significant.

Why does this matter for employers?

Currently, a controlling third party can be joined to a personal grievance. If that controlling third party is found to have contributed to the grievance, it may be liable for remedies including lost wages and compensation for hurt and humiliation. This scenario is common where there is a triangular employment relationship in a labour hire context, for example.

When it comes to joint employment, however, the potential liability is far greater. Unlike a controlling third party, a joint employer could also be liable for minimum entitlements, including, for example, minimum wage and any entitlements under the Holidays Act 2003, or as was the case in the Orakei Group Case, redundancy compensation.

Additionally, for an employee to join a controlling third party to their personal grievance, there must be existing proceedings against their employer to which the controlling third party can be joined. In a joint employment situation, however, the employee could pursue one (or more) of their employers directly, without having to go to the time and cost of joining other parties to the proceeding or pursuing preliminary claims.

What happens next?

It remains to be seen how triangular employment and joint employment might co-exist with one another and where the line between the two would be drawn. Arguably the concepts are incompatible due to the significant overlap between the “substantially similar control and direction” test for a controlling third party and the “common control” test for joint employment (arising from the Orakei Group Case which pre-dates the Employment Relations (Triangular Employment) Amendment Act 2019 by over a decade). Any distinction which the courts may draw will become key, given the significant difference in liability.

Ultimately, joint employment will make it more difficult for businesses to use complex corporate structures to evade their employment obligations. While this is positive in many regards, it does also create uncertainty and may result in employment relationships being created between parties who did not intend to enter into an employment relationship with one another. It may also have considerable implications for franchisors, businesses using contract labour or closely-related companies.

Accordingly, how the concept of joint employment develops is likely to have a significant impact on employment law in New Zealand in more ways than one.

Watch this space.

Rosie Judd – Senior Associate, Wynn Williams Employment Team

Sarah Hood – Associate, Wynn Williams Employment Team