July 2011 Issue 21

EMPLOYMENT LAW NEWS

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Issue No: 21

NEWSLETTER JULY 2011

Now is a good time to produce another newsletter, as from the 1 July 2011 all new employment agreements and any variations to existing agreements must carry the employee’s signature. Labour Inspectors now have the power to request both signed and unsigned agreements and to pursue substantial penalties against employers who don’t comply with the law.

This is important for a variety of reasons not the least being that a new employee covered by a trial period of up to 90 days (the exact trial period should be specified in the agreement) who has not signed an employment agreement before they start, will be able to treat the trial period as ineffective.

While there was plenty of criticism in the house and by the unions when this trial period law was debated in the house described as the ‘fire at will’ provision, no opponents objected to the governments wish to double the penalty provisions in the ERA against individual employers from $5,000.00 to $10,000 and against Corporations from $10,000 to $20,000. And as it turned out the ‘fire at will’ description is far from accurate as the first case out of the Employment Court has confirmed. Smith v Stokes Valley Pharmacy Ltd.

This case was mentioned in the previous newsletter and has not been disturbed by the subsequent legislative changes.

Since the trial period amendment to the ERA, there are now two more cases in the Court awaiting judgement in regards to the 90 day trial period.

The first case, Parkes v Squires Manufacturing Ltd involves a question about whether the employee who orally accepts written terms of employment which includes a trial period before the employment commenced, but then signs the agreement after the employment commenced, is able to treat the trial period as invalid.

Regardless of the outcome of this case, after the 1 July a signature will in fact be a statutory requirement unlike when this case was decided by the Authority.

The second, Blackmore v Honick Properties Ltd, is whether an agreement to employ a person made orally, with the full written terms provided later which includes a trial period, is valid on the basis that the person who agreed orally to employment became a person ‘intending to work’ and was therefore an existing employee when the agreement was produced in written form. Blackmore says he accepted employment on the basis that there would be no 90 day trial period.

The 90 day trial period cannot be used on existing employees or employees who have been employed previously by the employer.

The ERA defines a person who has been offered and has accepted employment before the commencement date as a person intending to work and therefore an ‘employee’ for the purposes of the Act.

UNCHARTED WATERS -

There are also questions about what obligations an employer has during any trial period in terms of alerting an employee that the performance is not to the level required. This requirement goes to the statutory good faith obligations on an employer to be ‘responsive and communicative’ when an employee’s employment is at risk.

The 90 day trial provisions in the Act specifically preserve that obligation, focusing only on limiting the obligations on employers around the dismissal process itself.

Another question is whether in the absence of a specific exception provided for in an employment agreement, the contractual disciplinary process must be followed during a trial period.

More questions will undoubtedly arise in the future so a diligent employer should treat all employees the same whether within a trial period or not. The costs of not doing so may be in the range of thousands of dollars as this poorly thought out law is steadily unwrapped by clever lawyers.

The learned practitioners, when the 90 day trial was being raced through the house, warned the government that “fast law is almost always bad law.” So true, as Stokes Valley Pharmacy found out the hard way.

There will no doubt be more victims to come. Don’t you be one of them.

Now is a good time to check to see if your employment agreements are up to date with the current legislation. Contact us if you would like us to update them.

NEW SERVICE -

A reminder that we have upgraded our services to include covert camera surveillance for situations where you suspect dishonest employees. This service compliments our computer monitoring service.

We have the top of the range equipment which is used and trusted by some of the largest law enforcement departments all over the world.

So if you have noticed any items or money going missing, or you want to keep an eye on time management of your staff, or for any other reason, contact us today for information and pricing for your surveillance needs.