Ensuring trial period clauses in employment agreements are valid

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There has been high employer uptake of the recently-introduced 90-day trial period for new employees, but several recent cases demonstrate that certain requirements are necessary for a trial period clause to be enforceable.

For a 90-day trial period clause to actually be enforceable the technical requirements stated in the Employment Relations Act must be met, employment lawyer Karen Radich from Clifton Chambers said. “The Employment Court has stated that sections 67A and 67B of the Act (which allow for trial periods to be used) will be interpreted strictly because it is legislation that removes a person’s access to courts and tribunals.”

Radich said that several recent employment decisions provided good examples of common employer mistakes in either drafting or implementing a trial period clause in an employment agreement.

 

  • In Blackmore v Honick Properties Limited, the Employment Court held that the trial period referred to in the employment agreement was invalid because it had not been included in the initial employment offer made to the employee.
  • In Rix-Trott v The Freight People Limited, the Employment Relations Authority (ERA) held that the trial period referred to in several documents (including the employment agreement) was not compliant with the legislation because it did not contain certain requisite elements.
  • In Hart v 32 Gems Dental Care Limited, the ERA held that a trial period provision was invalid because, at the employer’s request, the employee had started work for the employer a day before she received the employment agreement.

Key HR takeaway:

 

  • The trial period must be put in writing and must be contained in the employment agreement.
  • The trial period clause must state that:
  1. the employee is to serve a trial period for a period not exceeding 90 days;
  2. during that period the employer may dismiss the employee; and
  3. if the employee is dismissed during the trial period, the employee is not entitled to bring a personal grievance or other legal proceedings in respect of the dismissal.
  • The employee must not have been previously employed by the employer, which means the trial period clause needs to be provided to a prospective employee as part of the initial offer of employment.
  • The employer must give the employee a copy of the intended agreement.
  • The employer must advise the employee that they are entitled to seek independent advice.
  • The employee must be given a reasonable opportunity to seek advice about the terms of the offer of employment.

 

Related story: Trial periods used to reduce hiring risk

 

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