The Employment Court of New Zealand has ruled in favour of Madison Recruitment Limited (part of New Zealand staffing firm Accordant Group) in a case where eight of its former employees brought legal proceedings claiming they should have been considered as employees of the Inland Revenue.

The Court found the eight former employees were Madison employees on assignment with the Inland Revenue.

The eight plaintiffs entered employment agreements with Madison Recruitment Ltd, who placed them for work purposes with the Inland Revenue Department. The employees had contended the real employment relationship was with Inland Revenue and not Madison.

The decision stated, “On the face of the documents we have reviewed, there were triangular arrangements between these parties. There was an overarching commercial agreement between Inland Revenue and Madison.”

The decision also noted that the plaintiffs signed documents which acknowledged Madison as their employer, not Madison’s client.

“The other documents provided to them endorsed Madison’s status as their employer. On the basis of the agreed provisions, Madison became the plaintiffs’ employer in each instance, not Inland Revenue,” the decision stated.

“The case confirmed the legitimacy of an organisations’ use of contingent or temporary workers engaged through a labour hire agreement with an agency,” Accordant Group stated. “In this particular case, Madison is the employer and has a business relationship with its client, Inland Revenue, to provide workers to help with seasonal demands or other peaks in workflow.

CEO of Accordant Group Simon Bennett noted that the case also highlights the need for employers to have thorough systems and fair practices in place. He added that this was ‘demonstrated by Madison throughout their employees’ assignments with Inland Revenue; with ongoing engagement and care that went much further than required by legislation to look after its staff.

“As expected for any employee, temporary staff are eligible for, and receive all statutory entitlements, including leave entitlements. They are also given the right to join unions and bargain collectively,” Bennett said.

“I am proud of the care that my team was shown to have taken for the plaintiffs when they were in our employ, which was evident throughout the proceedings. Contingent workers play a hugely important role in the New Zealand economy and this labour hire model ensures workers can meet the seasonal demands or other increases in workflow for organisations in major sectors from government, major companies and the construction sector” Bennett added.

The case was first filed by four of the plaintiffs in 2019, supported by their union the Public Service Association (PSA). Had the Court found the Inland Revenue was their employer and not Madison, this would mean that the workers would be covered by the PSA's collective agreement, which includes better pay and sick leave, overtime and meal allowances. PSA had argued that the Inland Revenue was controlling those employed by Madison Recruitment, who were fully integrated into the department.

Staffing Industry Analysts reached out to the PSA but the union had not yet responded.