Employment Court Reiterates 90 Trial Period

In its second decision relating to the 90 day trial period provisions the Employment Court has found that an employer cannot rely on a trial period provision to terminate employment, particularly if the provision was introduced after employment had commenced or if the employment agreement containing the trial period provision was not signed prior to employment commencing.

In the case of Blackmore vs. Honick Properties Limited the court determined that the trial period was not valid and referred to its previous decision in the Stokes Valley case where it reiterated that for an individual employment agreement to contain a valid trial period provision the individual employment agreement must be entered into before the employee has begun work for the new employer. The court provided the following practical advice to employers; 

"This will mean in practice that trial periods in individual employment agreements must be provided to prospective employees at the same time as, and as part of, making an offer of employment to the prospective employee. The legislation then required that the prospective employee be given a reasonable opportunity to seek advice about the terms of the offer of employment (including the trial period provision) pursuant to s 63A(2)(c). It will only be when that opportunity has been taken or has otherwise passed, any variations to the proposed employment has been settled, and the agreement has been accepted by the prospective employee (usually by signing), that there will be a lawful trial period effective from the specified date of commencement of the agreement, usually in practice the date of commencement of work."

In relation to the length of time which should be allowed for an employee to seek independent advice about the terms of the offer of agreement the court added "the law also requires that an intending employee must have an opportunity to consider and take independent advice about an employment agreement before he or she enters into it. What the opportunity amounts to temporarily will depend upon the circumstances of the case. However, realistically, an employer will not be entitled in law to insist upon immediate execution of a form of employment agreement after its presentation to a potential employee. Nor, probably, its signed return within less than a few days or even more, depending upon the circumstances (including the time of year, the whereabouts of the parties and the like), fulfil the employer's statutory obligations."

In summary this second case has addressed the need for employers to ensure that in bargaining for an individual employment agreement that they are complying with the provisions of the Employment Relations Act 2000 and that employers ensure that potential employees sign an individual employment agreement which contains a trial period provision before they become an employee. Any offer of employment made to a potential employee should therefore be expressly conditional upon the employee's agreement to the terms and conditions of a written individual employment agreement, in respect of which they are given a reasonable opportunity of seeking advice prior to signing.

(SOURCE: [2011] NZEmpC 152 Blackmore v. Konick Properties Limitied, and The Advocate, MGZ Mcpahail Gibson & Zwart ltd, More 90 Day Trial Period Woes, Issue 202, January 2012).