Getting a 90-day trial period wrong can be costly for employers…

The Employment Relations Authority has ordered an employer to pay an employee $27,000 after the employer unjustifiably dismissed the employee.

The employee had been working for the employer for two months when he had to travel overseas for the funeral of a close relative. However, the employee was not paid correctly for the work done in the week prior to his departure. When the employee contacted the employer he was told that there was no longer work for him.

The employee raised a personal grievance with the employer and later made a claim in the ERA.

The ERA held that there was not an enforceable 90-day trial period because it did not meet the legal requirements under New Zealand law. As such, the ERA found that the employee had been unjustifiably dismissed. The employee was awarded:

• lost wages; and
• $10,000 in compensation for hurt and humiliation.

The outcome would have been different for the employer if the trial period was effective.

Correct wages must still be paid to the employee, but there would be no claim for unjustified dismissal or lost wages following dismissal.

In order to have an effective trial period, it must:

• Be agreed to and contained in the employee’s employment agreement and signed by both parties, prior to the commencement of work.
• Specify the length of the trial period which can be 90 calendar days or less.
• State that the employer can dismiss the employee and the employee cannot raise a personal grievance or bring other legal proceedings about their dismissal.
• Be in relation to a new employee (not an existing or previous employee).

Ben Ruback

Employment Lawyer Wellington