EMPLOYMENT LAW NEWS

October 2010

Issue No: 18

90 DAY TRIAL PERIOD – STRUCK BY LIGHTNING

The Employment Court has just released a Judgement testing the March 2009 amendments to the Employment Relations Act 2000 which introduced the 90 day trial period provision as section 67A. (Smith v Stokes Valley Pharmacy (2009) Limited)

 Currently, the Government is proposing to extend the 90 day trial provision to all employers and not just those who employ fewer than 20 employees.

 Although s67A seems to be straight forward, the Chief Judge of the Employment Court took it apart and identified a number of other relevant factors to consider which are:

Only a new employee can be subject to a trial period. In this case, the employee worked for a day before signing the written employment agreement. The Chief Judge found that this brief period of employment was on the terms and conditions that transferred from her previous employer and therefore she was not a new employee when she accepted the agreement. This meant the trial period could not apply. 

Exercising the trial period does not relieve the employer from giving notice, either under the agreement or, in the absence of a notice period specified in the agreement, for a reasonable period. 

While s67A does not require an employer to provide the reasons for dismissal in writing after the dismissal, if the trail period is exercised and the affected employee makes that request, the obligations owed by an employer to be responsive and communicative under the good faith provisions still remain and therefore the employer is obliged to provide a reason for dismissal if requested, and that explanation must not be misleading or deceiving. 

The Chief Judge also held that the good faith obligations still remain when dismissing an employee under the trial period including some of the procedural fairness issues that are required for permanent employees. 

It was emphasised that any employer that wished to exercise the s67A clause must have all of the essential elements contained in the employment agreement for the entire clause to have any effect at all.

It appears that all the media hype opposing the trial period has been settled by the Court’s decision.