Ruling may end unpaid job trials
Unpaid work trials in New Zealand could be over following a landmark employment case featuring a brief trial at a small Nelson lunch shop.
Employment law specialists say the case also has implications and questions around unpaid internships or training as part of a qualification.
Chief Employment Court Judge Graeme Colgan has suggested Parliament could change the laws governing work trials after ruling on an appeal from the Salad Bowl, in Bridge St, against an earlier Employment Relations Authority (ERA) decision.
Hospitality New Zealand legal adviser Alyn Higgins said the ruling meant employers could still ask prospective employees to undertake tasks as part of the recruitment process. However, they would not be able to get any economic gain from those tasks.
For example a barista could make a coffee for an employer and a chef could make interviewers lunch. However, the coffee or lunch could not be sold.
If the prospective employee did tasks that potentially benefited the employer's business there was a risk of an employment relationship.
"Fundamentally I think the question that hospitality employers will need to ask themselves in the future is: Is this person doing something which I am deriving commercial gain from? And is it doing something that replaces what would otherwise be paid employment?
"And if so then probably they are going to have to be taken on for a trial period, which could be up to 90 days. That would seem to be the message from the court."
Mr Higgins said there was also a potential issue for people engaged for internships and work experience. The decision did provide for volunteers.
"I do know in the hospitality sector that many polytech graduates, school leavers, they habitually do come in and get short term unpaid work in order to try out their skills as a way to gain work experience."
He said employers needed to be aware of this recent decision: "It is quite a high profile decision."
The Salad Bowl case involved job seeker Amberleigh Howe-Thornley, who carried out a trial over two days at the salad bar last August. Salad Bowl owner Randi Westphal later believed she had taken $50 from the till and texted her to say there was no job for her.
Ms Howe-Thornley took a personal grievance case which turned on whether she was actually employed during the work trial.
The ERA found she had been employed, and had been unjustifiably dismissed, particularly because there was no investigation into the missing money allegation and she had been given no chance to respond to it.
Judge Colgan supported those findings, and agreed that Ms Howe-Thornley should be paid for lost wages and compensation for humiliation and loss of dignity, totalling $6200.
In his wider findings, the judge said employers who want to "try out" potential employees may have to engage them under the up to 90-day trial period of the Employment Relations Act, instead of informal work trials.
He said although such a move would impose greater compliance costs, it would offer some protections to employees and allow the employer to terminate the arrangement "without the risk of an unjustified dismissal personal grievance".
The judge said he did not underestimate the practical consequences of his decision for employers in the food, beverage and service sectors, where short work trials were common.
"Indeed such trials have some benefits for prospective employees as well. This case illustrates what happens at one end of a potentially very broad spectrum of similar practices which are open to abuse."
Judge Colgan said if it was thought that the judgment would impose "unreasonably arduous obligations on prospective employers and employees" it might be that "Parliament should consider the scope of the restrictions that it wishes to impose concerning work trials.
Parliament could consider "how best to both prohibit the abuses of these that can occur and also allow reasonable, practicable and fair assessments of potential employment to be undertaken by both parties."
The previous ERA decision found that since April 1, 2011, trial
periods had to be confirmed in writing beforehand, and there was no facility for "unpaid experiments".
Nelson lawyer Luke Acland said the judge was wanting to avoid a situation where there were massive unpaid internships. "You've got a sliding scale of an interview at one end and a year-long internship at the other." He said the best way to avoid these issues was for employers to build a relationship.
Employment advocate Kevin Murray said it was a "watershed decision". To undertake trials employers would now need a clear written agreement so both parties knew what the trial was for and how long it would be.
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