Cases are still being tested at the Employment Relations Authority (ERA) with botched 90 Day Trial Period terminations.
The 90 Day Trial Period legislation was first introduced nearly 16 years ago. After a flurry of cases brought before the Courts and ERA testing the boundaries for the legislation, the rules were fairly promptly established as to what is acceptable and what is not to make the 90 Day Trial Period legislation legal and enforceable. Unfortunately those rules still illude some employers.
One of the problems with invoking a 90 day trial period is that by definition it is high risk if you get it wrong. As an employer, terminating a staff member's employment is as serious as it gets. If it is found that your process is non-compliant the 90 day trial provision is invalidated, and you have now terminated someone unlawfully, subsequently the usual fines and restitutions will apply.
In a recent case brought before the ERA with
Singh v Pilling & Leggett Engineering Co Ltd multiple shortcomings were found; incorrect reference to the correct section of the Act, employee not being advised he could seek independent advice, and no notice of termination given, all in all costing the employer over $17,500.00, and all entirely avoidable.
The established rules when it comes to the successful implementation of a 90 Day Trial Period are immutable. There is no scope for error or deviation when relying on them. They are:
- A compliant 90 Day Trial Period clause is contained in the employee’s employment agreement – the trial period clause must state that if the employee is dismissed under the trial period they cannot challenge the dismissal;
- The employee is provided with a reasonable opportunity to seek independent advice on the proposed offer of employment before starting, we recommend at least 3 to 5 working days minimum;
- The employer has never previously employed the employee before in any capacity;
- A 90 Day Trial Period cannot be extended under any circumstances;
- The employee signs and returns their employment agreement before starting work;
- If the employee is terminated under the 90 Day Trial Period, then they must be given notice as per the Trial Period clause contained in the employee’s employment agreement. Namely, the correct period of notice under the trial period clause of their employment agreement must be given; and
- Notice of termination must be given before the expiry of the 90 Day Period (which are calendar days not working days).
Although employers are not required to give reasons for a termination under this legislation, the ERA and Court has held that employers still have to act in good faith and as such an employee should know why they are being terminated.
Also, since the 29th October 2023, workers hired under the ‘Accredited Employer Work Visa’ (AEWV) scheme are excluded from the use of 90 Day Trial Periods.
When it comes to checking the validity of your 90 day trials we strongly suggest you keep our 90 day trial tools close to hand. Double check your dates and steps on our following webpage:
www.employers.co.nz/90day-trial-period-tools.aspx