The Trial of Trial Periods

When, in 2009, the Employment Relations Act was amended to allow employers a “free sample” of a new employee, dire predictions were made.  On the one hand, employee advocates predicted the end of employment security as we know it, and lower mobility, while on the other, employer representatives claimed this would provide the necessary confidence to dramatically boost employment.  Probably, neither have occurred to any measurable degree, despite some statistics suggesting that up to 70% of new employment agreements contain a trial period.  However, the last eight years have produced considerable work for employment lawyers.  

The purpose of s67A and 67B of the Employment Relations Act is to allow an agreement to limit an employee’s right to take a personal grievance claim for an unjustified dismissal if it occurs within the first weeks of their employment.  

Given that it takes away rights, the sections have some rules which must be met for the trial period to be effective.  In particular:

-    The trial period agreement must be in writing

-    The trial period may not be longer than 90 days

-    The employee may not have previously been employed by the employer

-    The employee may not be treated differently to an employee without a trial period

All of that seems fairly straight forward, but alas, things are seldom as they seem!  It is a well-established principle of law that rules which limit someone’s access to justice (eg the right to challenge a dismissal) must be interpreted strictly.  Because of that, since trial periods have been available the Court has minutely examined the circumstances of any trial period agreement that comes before it.  As a result, there are now a bunch of extra rules to bear in mind.  These include:

-    If the agreement is signed sometime after the employee has started work, they are no longer a “new employee” and there can not be a trial period – so an employment agreement must be signed by both parties before the employee’s first day on the job

-    If an oral offer of employment is made and accepted, a trial period will not be valid

in the written agreement unless the employee also accepted that at the time of the oral offer – because they were an employee at the time of the oral contract and not a new employee at the time of the written agreement

-    If the employment agreement provides for notice in writing, then a dismissal in accordance with the trial period must be made in writing.  If no written notice is given (where required), then the trial period is not an effective defense to a dismissal claim

-    Although you are not required to give written reasons, failure to explain why you are dismissing in reliance on the trial period may be a breach of good faith and give rise to other (allowed) personal grievances.  You may be required to provide feedback, or to manage performance concerns throughout the trial period. 

The upshot?  Trial periods are complex, require deliberate thought and careful management.  If you employ people or are employed subject to a trial period it pays to take advice.