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Employment Court Attacks 90 Day Trial Period

Published 08 Feb 2012

Preliminary Ruling on 90 Day Trial Period Clause's Validity.

Mr. Blackmore and Honick Properties Ltd (HPL) emailed each other and informally agreed for Mr. Blackmore to begin employment. HPL claimed a 90 Day Trial Period was discussed at this stage. HPL did refer to a written Federated Farmers standard agreement being required, but HPL did not supply this document with its email offer of employment. Mr. Blackmore accepted the offer by return email.

Mr. Blackmore then resigned from his previous role to take up a position at HPL and worked out his notice period. Several weeks later, during his first hours on the job, Mr. Blackmore was given an employment agreement to sign. This included provision of a 90 Day Trial Period. He was asked to sign the agreement ASAP, which he did. Prior to the end of the 90 Day Trial Period, he was dismissed, under the provision of the 90 Day Trial Period.

When the dispute arose, post dismissal, Mr. Blackmore said he was not happy about the 90 Day Trial Period being included in the written agreement and he said that the first time it had been raised was after he had physically begun work.

Mr. Blackmore took his case to the Employment Relations Authority, who referred it to the Employment Court. The Court determined that Mr. Blackmore is entitled to challenge the justification for his dismissal despite the 90 Day Trial Period provision in his employment agreement. The Court concluded that he was an existing employee of HPL when he executed the individual employment agreement on his first day of work and thus was not an employee to whom a 90 Day Trial Period provision in an employment agreement could apply.

Alternatively, the Court found that the employment agreement, and particularly the 90 Day Trial Period provision, were unfairly bargained for by HPL as Mr. Blackmore was not given a full opportunity to consider, take advice on or negotiate the proposed written agreement, neither before beginning work, nor before a binding informal offer and acceptance had taken place. This meant the 90 Day Trial Period clause was deemed defective and the parties were required to mediate on that basis.

This case demonstrates several critical points: - Please adhere carefully to our processes and procedures to lessen the risk.
  • The importance of providing an applicant with a draft employment agreement well before they are offered a role.
  • Any 90 Day Trial Period provision should be documented, discussed and agreed to before any offer is made.
  • Employers must provide candidates with plenty of time to consider an employment agreement before signing it – this includes the opportunity of seeking advice, obtaining clarification, bargaining and discussing with the prospective employer
As a result of the ERA's decision, Mr. Blackmore will be entitled to challenge his dismissal where he may or may not succeed. HPL will not be able to rely on the 90 Day Trial Period law.

This case has made the use of 90 Day Trial Periods even more difficult for Employers. Because of the importance of this case and its impact on conducting a 90 Day Trial Period, we will provide you with more information shortly.