Section 136 of the Employment Act (Chapter 373) is short, easily overlooked, and directly relevant to how a great deal of contract labour is arranged in Papua New Guinea.
Section 136 — the offence
An employer who, for gain, places or permits to be placed an employee employed by him under the immediate authority of a person other than:
(a) the employer; or
(b) a member of a firm or partnership of which the employer is a member; or
(c) a person employed by the employer,
is guilty of an offence. Penalty: a fine not exceeding K300.00.
Four elements have to be present:
- there is an employer and an employee — a contract of service, not a contract for services;
- the employee is placed, or permitted to be placed, under someone’s immediate authority;
- that someone is outside the three permitted categories; and
- it is done for gain.
Reading the elements
| Element | What it means |
|---|---|
| “Immediate authority” | Day-to-day direction and control — who tells the worker what to do and how. Not ultimate ownership of the project |
| “Places or permits to be placed” | Passive acquiescence is enough. An employer that lets the arrangement continue is within the section |
| “For gain” | The employer profits from the placement. A genuine secondment at cost, or a co-operative arrangement with no margin, is a different case |
| The three permitted categories | The employer itself; a member of the employer’s firm or partnership; or a person employed by the employer |
A related company is not among the three categories. Neither is a client, a head contractor, or a joint venture partner. The permitted categories are the employer, its partners in a firm or partnership, and its own employees.
The provision does not prohibit contracting out work as such. What it addresses is placing your own employees under someone else’s day-to-day direction while profiting from the placement.
Section 136(2) — the Secretary’s consent
A prosecution under subsection (1) shall not be instituted without the consent of the Secretary.
This is a filter, and it has a practical consequence: a worker cannot simply lay a complaint and expect a prosecution. The route is a complaint to the Department, so that a labour officer can investigate and the Secretary can decide. Section 145 then allows the Secretary, or an authorised officer, to institute and appear in the proceedings.
Set out, in writing: who your employer is; who actually gives you day-to-day instructions; where you work; what the arrangement between the two businesses appears to be; and what you were told at engagement. Attach your pay statements and the contract or section 15 record.
Why the arrangement matters to a worker
Beyond the offence, the practical difficulty with hired-out labour is that obligations get lost between two businesses. The Act answers that in three places:
- Section 150(3) — where an employer appoints a person to perform its functions under the Act, that person is deemed to be the employer for those functions, but this does not relieve the employer of its own duties or responsibilities, civil or criminal.
- Section 26 — on a transfer of contract, all rights, privileges, responsibilities and liabilities, including unpaid wages, vest in the transferee. A transfer needs the employee’s consent endorsed on the contract (s 25(1)).
- Section 11(1) — employing a person otherwise than in accordance with this Act is an offence.
So the entity that pays you remains your employer, and remains liable for wages, leave, notice, housing, medical treatment and repatriation, whoever is directing your work on site.
Related offences in Part X
| Section | Offence | Maximum fine |
|---|---|---|
| 133 | Fraud, misrepresentation, intimidation, coercion or undue influence for employment purposes — including misleading an employer or employee as to his rights, duties and responsibilities | K500.00 |
| 134 | Undue influence to induce an employee or dependants to purchase goods from any person | K300.00 |
| 135 | An agent or recruiter failing to ensure the person who travels is the person engaged | K200.00 |
| 106 | Recruiting without being a worker-recruiter or an employer acting for itself | K500.00 or two years’ imprisonment |
| 110 | Carrying on an employment agency without a licence | K500.00 |
See the offences under the Act for the full list.
Working out where you stand
- Who pays you? That entity is your employer.
- Who directs your daily work? If it is someone outside the three section 136 categories, the arrangement may be unlawful.
- Is there a margin? The offence requires the placement to be for gain.
- Check whether a transfer was proposed — if so, your consent endorsed on the contract is required, and section 26 carries all liabilities across.
- Are you an employee at all? See employee or contractor — a label does not decide it.
- Complain in writing to the Department, since a prosecution needs the Secretary’s consent.
- Keep claiming from your employer in the meantime — the arrangement does not suspend its obligations.
Sources
- Employment Act (Chapter 373) — ss 11, 15, 25, 26, 106, 110, 133–136, 145, 150
- Industrial Relations Act — PacLII 1986 Revised Edition
- Michael v Morobe Consolidated Goldfields [2008] PGNC 300; N3855
- Lo v Hevilift Aviation Ltd [2023] PGNC 177; N10413
Before relying on anything here, read the current text of the Employment Act (Chapter 373) and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.