Trial Periods: the Traps as Identified by Employment Lawyers

Trial Periods: the Traps as Identified by Employment Lawyers

One of the issues that employment lawyers are seeing frequently is employers being caught out by personal grievances made by employees where the employer believed that there was protection under the trial period provisions of the Employment Relations Act 2000.

The Employment Relations Act 2000 allows employers to have a 90-day period in which they may assess the suitability of an employee. During these 90 days, the employer may dismiss the employee, and the employee is not entitled to bring a personal grievance.

There are lots of traps, however, for employers that may void the ability to use a trial period.

If a trial period is found not to apply, any dismissal made in reliance on the trial period is almost invariably unjustified.

So what are the traps?

Trap 1 – Agreement signed once employee commences

Employment agreement must be executed prior to the employee commencing employment. In a local Wellington decision concerning the sale of a pharmacy, the employer sacked an employee in reliance on a trial period. The Employment Court considered that, as the employee’s employment agreement was executed on the second day of her employment, she could not be considered a “new” employee. The relevant section of the Act only allows trial periods where the employee has never worked for the employer previously. Working for the first day was sufficient to preclude the use of a trial period.

Solution: Make sure employment agreements are executed prior to commencement.

Trap 2 – Offers of employment

An offer of employment that makes no mention of a trial period applying will also prevent the use of a trial period. In a Whanganui decision of the Employment Court, a letter made an offer of employment to an employee. The employee accepted the offer, but did not execute an agreement until his first day of employment. The Court considered that the definition of employee in the Employment Relations Act 2000 also included a person intending to commence work. Therefore, as in the Wellington decision discussed above, the employee was not a new employee when the agreement was signed.

Solution: Offers of employment should be made by sending the employment agreement, containing the trial provision, to the employee with a cover letter that records the employee may accept the offer only by executing the agreement.

Trap 3 – Time to consider and receive advice

The Employment Relations Act 2000 allows the Authority or Court to void or vary a term of an employment agreement where it considers that it has been bargained for unfairly. If there is not sufficient time afforded to an employee to seek advice on an agreement with a trial period, the trial period may very well be ignored.

Solution: Provide the agreement well ahead of commencement with a cover letter informing the employee of the right to seek advice concerning the agreement.

Trap 4 – Incorrectly written clause

If the clause in the employment agreement does not inform the employee that a dismal may occur, and there would not be a right to bring a personal grievance for unjustified dismissal in the 90 day period, then the trial period will not be upheld. It will instead be found to be a probationary period. The employee may bring a personal grievance if they are sacked during a probationary period.

Summary

With these matters in mind, if an employer wishes to rely on a trial period, the offer of employment should be made conditional on the execution of an employment agreement that contains a correctly written trial period clause. The agreement should be provided to the employee at the time the offer of employment is made. The offer should be made with sufficient time allowed to the employee to seek advice concerning the agreement.

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