90 DAY TRIALS – GETTING IT RIGHT

Taking on new employees can be risky and ensuring that you have the right person for the job can’t always be determined through the interview process alone. That’s where the 90-day trial period (Trial Provision) may be of assistance to employers.

Trial Provisions give an Employer the opportunity to assess an employee’s suitability for the role and workplace. If the Employee is dismissed during their Trial Period, they are prevented from bringing a personal grievance or any other legal proceedings against the Employer. It’s important to know that a Trial Provision does not prevent an employee from raising proceedings on other grounds such as discrimination or unjustified disadvantage.

Use of Trial Provisions were restricted to Businesses that had 20 or less Employees, but, thanks to the latest amendments brought in to force on 23 December 2023 by the Employment Relations (Trial Periods) Amendment Act 2023, all Employers regardless of how many Employees they have, now have access to the use of Trial Provisions.

The rules surrounding the enforceability of Trial Provisions remain the same and it’s important that you understand the process correctly. If not, you may lose the protection that a valid Trial Provision offers and end up losing thousands of dollars in the process.

How to get it right

The requirements for a legally enforceable Trial Provision are set out in section 67A of the Employment Relations Act 2000. These are the essential requirements for a valid Trial Provision:

1. The Trial Provision in the Employment Agreement must state:
   • The length of the trial (which must not exceed 90 days) and that the trial will commence at the beginning of their employment.
   • That during the trial the employee may be dismissed.
   • If the Employee is dismissed under the Trial Period, the Employee is not entitled to bring any legal proceedings or personal grievance regarding the dismissal.

2. The Employee must not have been employed by the Employer previously.

The first requirement considers the form of the Trial Provision and the words used, while the second requirement considers whether the Employee qualifies for a Trial Provision.

Form of the Trial Period

Unfortunately, there are no magic words to ensure that there is a valid Trial Period and Parliament has left it to the discretion of Employers as to how to word each Provision. The key legal requirement is that a Trial Provision contains all of the information outlined above.

A Trial Provision may also provide for a shorter notice period for termination. This notice period applies mutually, meaning that if the Employee wishes to resign during the trial period, they can do so on the notice period provided in the Trial Provision.

Getting the wording wrong may mean that the Trial Period cannot be relied upon. For Employers this means seeking legal advice in drafting the Employment Agreement. For Employee’s it means seeking legal advice on the validity of the Agreement before signing.

“Qualifying” Employee

This is the most common cause of a Trial Provision being deemed unenforceable and it catches out more people than you would think.

It is vitally important to ensure that the Employee you are hiring has not worked for you before. This restriction applies even if the Employee worked for you several years ago.

However, the most common cause of Employers falling foul of this requirement is by either failing to provide an Employee with an Employment Agreement before they commence work, or by providing the Employee with an Employment Agreement but not ensuring that it is signed prior to commencement of work. While not always the case, both issues have caused what may have otherwise been valid Trial Provisions to be unenforceable.

By allowing a prospective Employee to perform duties for you prior to an Employment Agreement being signed, you run the serious risk that the Employment Relations Authority would consider the Employee to have been “previously employed” by you and therefore render the Trial Provision unenforceable. The Authority enforces the requirements of section 67A very strictly so even minor mistakes in the process can have a drastic effect. The rational for this strictness is that a Trial Provision heavily reduces the protection an Employee would usually have and therefore a fair process must be followed.

Avoiding this risk can be achieved by ensuring that an Employee or prospective Employee does not perform any work or duties for your company before they sign their Employment Agreement. It’s best practice to provide the Employee with the Agreement at least a few days prior to commencement to consider and take advice on the Agreement before signing.

Need help?

We can assist Employers in putting in place valid Trial Provisions, advise on the enforceability of any current Trial Provision and give advice about appropriate exercise of them. We can also assist Employee’s that are subject to Trial Provision or that feel they have been terminated under an invalid Trial Provision.

The friendly team at Wakefield’s Lawyers can assist employers and employees with anything from recruitment to redundancy and everything in between. If you would like some legal advice on employment, give the team a call on (04) 970 3600 or email info@wakefieldslaw.com.

Thomas Speight (Solicitor)

This blog is intended to provide information only and does not constitute legal advice.