A significant change post-election is that National intends to restore 90-day trial periods for all businesses within 100 days of being in office. Currently, trial periods may only be included for businesses who have less than 20 employees.
If an employee is dismissed pursuant to a trial period, they are legally unable to raise a personal grievance for unjustified dismissal. Because of that restriction on an employee’s rights there are also strict requirements that must be followed for trial periods to be legally valid. Even if the ability for all businesses to use trial periods is reinstated, it is likely those requirements will still remain. It is therefore important all businesses are aware of those requirements and these are followed to the letter.
For a trial period to be valid:
The employee must be a new employee. It the employee commences work prior to signing the employment agreement containing the trial period, they are not considered a new employee upon signing.
The date the trial commences and the length of the period must be stated.
A statement must be included in the trial period that if the employee is dismissed pursuant to it, they may not raise a claim for unjustified dismissal.
The employer must advise the employee of their right to seek independent advice and must provide a reasonable opportunity for the employee to do so. The employer must actually advise the employee of this either verbally with accompanying letter, or through email. The inclusion of a declaration in the employment agreement is not sufficient.
It is important to be mindful of what these requirements are to determine whether the trial period can be relied upon before an employee is unjustifiably dismissed in error. We strongly recommend that legal advice is first sought before issuing any decisions to terminate employment in reliance on a trial period.
Please note: Until this policy change is implemented businesses with more than 19 employees should not be including trial periods in employment agreements.
For any further information and advice on trial periods or other employment law queries, please contact Jaime Lomas, Director at DTI Lawyers – jaime@dtilawyers.co.nz
