A pitfall for employers in 90-day trial provision
The benefit of a trial period from an employer's perspective is that while an employee can raise some personal grievances against their employer within the trial period, they cannot claim they have been unjustifiably dismissed.
A decision from the Employment Relations Authority (ERA) reinforces the importance of a well-drafted employment agreement and the need for parties to understand 90-day trial periods.
Ms D was employed by RM, who quickly became unsatisfied with her work performance. They claimed that Ms D was constantly using the internet and phones in a personal capacity during work hours. RM claimed that Ms D was involved in too many social discussions and taking too long on breaks. The final straw for RM was when they found Ms D sleeping in the staff room. They dismissed her.
Ms D admitted using the internet in a personal capacity, defending herself saying that it was commonplace in the office to do so, with a co-worker telling her "we all do it". Ms D pursued a personal grievance for unjustified dismissal.
RM claimed to have dismissed Ms D pursuant to the 90-day trial period clause in her employment agreement. If this was correct, Ms D would be unable to raise a personal grievance for unjustified dismissal.
The clause in relation to the trial period in Ms D's employment agreement read as follows:
"The Employee's employment is subject to a trial period of 90 days. This means notwithstanding clause 11 during or at the end of the trial period the Employer may give the Employee 1 week's notice of termination of the employment. The Employer may require the Employee to work that notice period or may, at the Employer's option, to pay the Employee in lieu. The Employee acknowledges and agrees that if their employment is terminated under this clause they will have no right to pursue a personal grievance or other legal proceedings in relation to the termination of their employment, except for in the limited circumstances set out in Section 103(1) of the Employment Relations Act".
The problem was that this clause was quite ambiguous. The way in which it was written seemed to add the right to bring a personal grievance of unjustified dismissal.
The clause attempted to exclude the right to bring a personal grievance against the employer within the 90-day trial period, but then simultaneously told Ms D she had the right to bring the kinds of legal proceedings set out in section 103(1) of the act. This includes 103(1)(a) which allows an employee to bring an unjustified dismissal claim against their Employer.
In fact, the whole second part of the paragraph was unnecessary. The law specifically allows employees subject to 90-day trials to pursue claims of racial or sexual harassment, unfair disadvantage, or discrimination. It's only unjustified dismissal claims that can't be raised.
Because RM believed it was entitled to dismiss Ms D under the 90-day trial provision RM followed no process at all when it dismissed her, therefore the ERA decided that Ms D was unjustifiably dismissed and entitled to remedies.
Trial periods are useful clauses to have in employment agreements, but they need to be drafted and implemented properly. To help avoid the issues RM faced, remember:
* A trial period is voluntary, and must be agreed to by both parties;
* Trial periods must be agreed to in writing, and signed before the employee commences work;
* Employees can only agree to a trial period if they have not been previously employed by the employer;
* The clause relating to the trial period must be clear, unambiguous and legally correct.
Mary-Jane Thomas is a partner at Preston Russell Law. She is always interested in ideas for articles. Email her at Mary-Jane.Thomas@prlaw.co.nz.