News Article

latest news in employment law

Changes To Employment Law Through Their First Reading

Published 01 Aug 2010

The Government has proposed two Bills. One relates to the Employment Relations Act 2000 and the other relates to the Holidays Act 2003. please proceed with caution.

Our best guess is the legislation will be passed into law this year and come into force 1st April 2011. We (EAL) will hold seminars on the changes, probably in February 2011, but certainly as soon as we know the actual wording of the Acts.

Confused? We note the news media - the Government and other Authorities refer to a proposed amendment to a 'Probationary Period' referring to clauses for new employees (and for Employers to have in their employment agreements). This is causing serious confusion. In the hope we can help - let's explain:

There is - and was - a Probationary Period that could (and can) be included in the employment agreement. The Probationary Period can be extended assuming the Individual Employment Agreement says it can. Probationary Periods are usually 3 months in term. Normal procedures of dismissal apply. It is a period of assessment.

Then there is the 90 Day Trial Period and this is a different term and a different clause altogether. An Employment Relations Authority member has referred to the two terms as 'synonymous.' We don't. To hold the 90 Day Trial Period an employer currently must have 'less than 20 employees'. The 90 Day trial Period cannot be extended and the employee must agree for it to be included in the Individual Employment Agreement. Only 'new' employees can be subjected to a 90 Day Trial. We now advise that employers do not put both a 90 Day Trial Period and a Probationary clause in the IEA. We advise to have one or the other. 90 Day Trial Periods now require reasons to be given when notice of dismissal is given. The employee cannot raise a Personal Grievance if all of the employer's actions comply. It is however, illegal to discriminate, disadvantage or harass during a 90 Day Trial Period. Please phone EAL for advice 0800 15 8000.

All of the proposed changes tabled will require close scrutiny when the Bills become law. We will advise our clients when the actual wording is finalised. In between time – nothing has changed.

It Isn't Law Yet
The main proposed changes affecting employment are not passed into law yet. The proposed changes include:
  • The Holidays Bill - Employers may be able to insist on a doctor's certificate for just one day's illness (the employer pays the medical professional) – it suggests the 4th week's annual holiday may be traded for cash if the employee requests it and – employers can opt out of the negotiation through an IEA clause so they are not put under pressure to agree to pay. Employers can decide, if the employer & employee cannot agree which day will be the 'alternative holiday' after a Public Holiday has been worked.
  • The Employment Relations Bill - The 90 Day Trial Period proposes that employers with 20 and more employees will be able to negotiate a 90 Day Trial Period with new employees - Unions may require an employer's consent to enter the place of work, consent cannot be unreasonably withheld (whatever that means) – employers may be able to negotiate directly with employees in the Collective Employment Agreement bargaining process - minor or technical errors in procedure that surface during an Employment Relations Authority dismissal inquiry may not automatically provide compensation for the employee concerned. The Bill contemplates changing the wording of criteria by which determinations are based in that “What a fair and reasonable employer 'would' have done to 'could' have done might be a more reasonable basis. There are paragraphs that can only intend to lessen the importance of 'procedures' thus suggesting 'justification' might be taken more into account than pedantic examination of the procedure used. Interestingly, employer's resources available to manage the dismissal will also be taken into account. EAL advises caution in regard to this change if it takes place – please seek advice regardless. Employers will still be required to follow a very strict procedure or risk a legal decision going against them.

There are three major errors arising which prove costly to employers.

The first error seems to be where new employees are employed with a start date in (say) three months time. The effect of this is the 90 Day Trial Period is over before the employee starts and it cannot be extended. A 90 day Trial Period begins on the day he/she is employed.

If an employer says he will employ the candidate and arranges the employee to start in 3 months time and where the employee accepts the position - the candidate's status immediately changes to that of employee. They are 'someone expecting to work for that employer' are the words courts have ruled in their interpretation of the Act.

The second error arises when the employer brings the relationship to a halt not realising the trial period is over.

The third occurrence that will cause problems is when the employer fails to explain exactly why he is bringing the relationship to an end during the 90 Day Trial Period if he/she is asked. In his latest judgement Chief Judge GL Colgan has ruled employers who are asked to give a reason for the dismissal must give the reason.

The fourth relates to employers presenting an IEA after the employee starts work. Now the employer cannot insist on or negotiate a 90 Day Trial Period. Employers must negotiate and have a signed IEA prior to offering a candidate the job.