Cavell Leitch Employment Solicitor Jack Brown discusses how the recent passing of the Employment Relations Amendment Act 2018 (the Amendment Act) has meant the end of 90-day trial periods in some workplaces. Some provisions of the Act are now in effect already, while the remainder is to take effect on 6 May, he writes. This is also a good time for employers to update employment agreements, Jack adds.
Hailed “the start of a progressive programme in workplace relations” the Amendment Act makes a number of universal amendments to the Employment Relations Act 2000 (the Act).
One such change is the restriction on the use of 90 day trial periods to only those businesses that employ 19 or fewer employees. Trial periods allow employers to circumvent the usual procedural and justification requirements contained within the Act when dismissing during the first 90 days of an employee’s employment. The employee is then prohibited from bringing a personal grievance in respect of the dismissal.
Trial periods are beneficial for both business and job seekers, in that they incentivise employers to take chances on prospective employees that they may not otherwise. Nevertheless, from 6 May 2019, employers with 20 or greater employees (large employers) will no longer be able to include trial periods in their employment agreements.
Those employers may wish to look to alternatives. Of course all employers, but especially large employers, should ensure that they complete extensive due diligence on prospective employees before making any offers of employment. Those offers should be made conditional on the satisfactory return of references and police checks. Employees should not be allowed to commence work until the references and checks have been returned to the employer’s satisfaction.
In addition, with the removal of trial periods, large employers may also look to include a “probationary period” clause in their employment agreements as an alternative to trial periods.
Probationary period clauses
Section 67(1) of the Act allows for parties to an employment agreement to agree that an employee will “serve a period of probation after the commencement of the employment”.
Probationary period clauses are not trial periods. The Act explicitly states that a probationary period does not affect the law relating to unjustifiable dismissal. This means any dismissal imposed pursuant to a probationary period must meet the procedural and justification tests contained within the Act, and an employer is required to provide reasons for such a dismissal if requested.
A probationary period puts an employee on notice that their performance is being monitored. Where, during the probationary period, an employee’s performance is lacking, an employer is expected to raise that with the employee, provide appropriate training and support, and allow a reasonable time for the employee to improve their performance to the desired standard.
Only once an employer has genuinely, and repeatedly, assisted an employee to improve his or her performance during the probation period without success, may that employer look to terminate the employee’s employment pursuant to the probationary period clause.
Employers should keep in mind that they will be required to meet a high threshold in imposing a dismissal, and the employment institutions will expect an employer to have exhausted all reasonable alternatives to termination.
It will not be justifiable to terminate an employee for not being “the right fit” at the end of the probationary period. A probationary period must be included in an employment agreement to be valid. Employers should take care to ensure that any probationary period provision is drafted with the realities of the business in mind, meaning that the business can adhere to the terms of the provision, and that the terms are reasonable.
If you have any questions about the application of probationary or trial period provisions, please get in touch with us. This is a highly technical area of the law, and can be costly to get wrong. Given the recent, and impending changes to employment legislation, it is also a good time to update your employment agreements.
Employment Solicitor Jack Brown joined Cavell Leitch in 2016 as a clerk working for a number of teams across the firm, before settling into a permanent position in the employment team. Jack studied at the University of Canterbury, completing his law degree in August 2016 and was admitted as a barrister and solicitor in December of 2016. As a member of the specialist employment team, Jack provides advice on all aspects of employment law and attends mediations on behalf of his clients. Jack has also appeared in the District, and High Courts. Jack has a positive hands on approach to his work and takes a great amount of pride in producing positive results for his clients. He is committed to providing his clients with strategic advice, tailored to their specific needs and desired outcomes. Contact Jack at jack.brown@cavell.co.nz or connect via LinkedIn
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Disclaimer: Copyright © Cavell Leitch. All rights reserved. Redistribution is only permitted with express written permission. For enquiries please contact us. This article by its nature cannot be comprehensive and cannot be relied on by clients as advice. It is provided to assist clients to identify legal issues on which they should seek legal advice. Please consult the professional staff of Cavell Leitch for advice specific to your situation.