Once again 90-day trial periods have been hitting headlines as individuals challenge their former employer’s application of the statutory 90-day trial period. An interview with Dave Robb, our Employee Relations Specialist, makes it pretty clear there is still a lot of ‘grey’ in what was intended to be a ‘black and white’ process.
Dave, what is the most recent case from the Authority on the 90-day trial provisions?
The most recent case reported involved 4 early childhood teachers who had lodged personal grievances claiming unjustified dismissal against their former employer Lighthouse ECE Ltd. In each of the four teachers’ cases the teachers had had their employment terminated under the 90-day trial period clause of their agreements.
So what was so unusual about this?
The teachers successfully argued that the trial period clause in their employment agreement was not valid as the clause did not state when the trial period would commence.
What was the reason for the Authority Member making this determination?
The Authority found that the employment agreements “did not reasonably imply that the 90-days started on the first day the teachers started work”. It would seem that because the employment agreement did not state the actual date when the 90-day trial would begin, the Authority Member has decided that the 90-day period commenced from when the agreement was signed – not when employment actually commenced.
What should employers take from this?
Unless this determination is challenged, this means that the teachers’ claims for unjustified dismissal can be progressed to an Authority investigation in the coming months. While this is ‘new law’, we advise you to have your employment agreements reviewed by Grow HR at least annually where they have 90-day trial provisions.
So Dave, what other recent cases are there?
Still on the 90-day theme, another interesting decision is Modern Transport Engineers (2002) Limited v Phillips. In this case the Employment Court held that the employer was entitled to rely on a 90-day trial period provision, in spite of the fact that it was unable to produce a signed copy of the employment agreement.
So what were the details of this case?
Employee Phillips employment had been terminated under his 90-day trial period. His argument was that he could not recall having seen a 90-day provision in his agreement and that his former employer had not been unable to produce a copy of the signed agreement so could not rely on it. In his evidence Phillips did accept that he had retuned a signed copy of his agreement before he started employment, and that he had time to take it away and get independent advice before signing it. He also confirmed that a signed copy of the agreement had been sent to him.
Were there any unusual circumstances with this case?
The most interesting aspect was that Phillips’ personnel file had somehow disappeared from the employer’s premises before the decision to terminate his employment. No other files were missing.
The Company successfully argued that it had a standard form employment agreement template which was used for all employment offers. This template contained as a standard term the a 90-day trial period provision. The company also successfully argued that all 90-day procedural requirements had been satisfied – that being that the 90-day provisions was in writing, that it was part of the employment offer, that the employee had the opportunity to seek advice, and that there had been a signed agreement prior to employment commencing accepting the 90-day provision.
What did the Employment Court have to say about this?
The Court accepted the company’s position and held that Phillips had been given an employment agreement in the standard form that contained a 90-day trial period provision, that he had been given reasonable opportunity to take independent advice and had signed the agreement before commencing work. While it is a legal requirement for an employer to retain a copy of an employment agreement, and failure to do so may be subject to a fine, the Court commented that this did not render the agreement or the 90-day trial period contained in it invalid.
What is your advice based on this Court decision?
It’s simple really, make sure your personnel files are kept secure at all times and that they can only be accessed by authorised staff. And like Modern Transport Engineers have robust and consistent processes for all new employees.
90 days is a hot topic then - are there any other recent cases of interest?
Yes, in Lawrence v Bee Happy Bees, the employer found out the hard way that it is not enough to simply rely on the legislation to terminate an employee under a 90-day trial period. Lawrence was employed as a beekeeper. He understood his role to be as a general labourer. He was provided with a blank employment agreement template to read and sign. It didn’t include his name, pay rate or make any mention of a 90-day trial period.
I guess I know what’s coming with this one?
Yes. Shortly into his employment, employee Lawrence was told his performance was unacceptable and his employment was terminated in accordance with the 90-day trial period. As expected the dismissal was determined as unjustified by the Authority on the grounds that there was no 90-day provision in the employment agreement and because the employer failed to demonstrate it had followed a reasonable process.
So?
Simple really, ensure that your employment agreements include a specific (and compliant) 90-day trial period clause and that your new starters have sufficient time to read and understand their agreement, to take advice and to sign and return the agreement before they commence their employment.
For more information about 90-day trial period provisions or to get your current wording in your employment agreement templates checked contact Grow HR on 06 8785454 or email team@growhr.co.nz.