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90 Day Trial Period Controversy

Posted on: Mar 25, 2013

There have recently been two pre-employment ‘trial’ trial period cases before the Authority, which seem to have had conflicting determinations made.  Yet again, more questions have been raised regarding the interpretation of the 90 day trial period legislation, section 67A of the Employment Relations Act 2000.

The first case (Ahuja v Eden Mozaik), involved an employee who was dismissed approximately one month into his employment as a pizza chef.  He had been hired following a pre-employment ‘trial’ which lasted 2 days.  The trial was short, voluntary and unpaid.  Following the trial, the man was given a written employment agreement including a 90 day trial period. He was given the opportunity to seek independent advice before signing. Three days later the man signed and returned the employment agreement.

The main issue for the Authority was whether the man had been previously employed when he accepted the employment agreement including a trial period. Under section 67A of the Employment Relations Act 2000, only a person who has not been employed by the employer before can enter into a trial period agreement. Therefore, if he was an employee before accepting the agreement, the trial period part of that agreement would not be valid and he would be free to raise a personal grievance in respect of the dismissal.

The Authority considered that the man was not previously employed by the employer when he accepted the trial period agreement. He had volunteered to a ‘trial’ for a couple of days to get the feel for working at the employers’ premises. The Authority concluded that such a “trial” did not make him an employee, therefore he was able to enter into a trial period agreement which prevented him from bringing a personal grievance for unjustified dismissal.

The second case examined by the Authority was Howe-Thornley v The Salad Bowl Limited , where the employee, who was subject to a pre-employment ‘trial’, was dismissed over missing $50.  Following an interview, the woman claimed that she was offered a position with the employer. However, the employer argued that a position was never offered to her, and instead was told that she would have to undergo a three hour trial to assess her suitability for the job.

On 20 August the woman went to work at the Salad Bowl. She assisted in the preparation of salads and performed some cleaning tasks. The next day, she began to serve clients and also operated the till. At the end of the second day, the employer counted the till and found there was a shortfall of $52.36. The till had never been that far out before. She concluded that the woman had taken it, so she sent her a text stating that there was no need to come back to work tomorrow and they would be in touch.  A week later the woman followed up via text with the employer to ask when she was required in to work again. She was then informed her that there was no job for her any longer as she had taken money from the till.

The Authority had to first decide whether the woman had become an employee of Salad Bowl. The Authority held that she was working because she spent time preparing food for sale and served clients. The employer also stated that they normally pay prospective employees for work during this ‘trial’ period. In this case the employer decided not to because they found that money went missing. The Authority held that as there was an intended exchange of work for remuneration it met the fundamental characteristics of employment.

The Authority went on to state that even if the above statements were wrong Parliament has now addressed the use of trial periods. Since April 2011 trial periods must be confirmed in writing prior to commencement of employment. There is no facility for unpaid trial periods. The Authority considered that it was arguable that a short unpaid trial period followed by a formal 90 day paid trial period is unlawful.

The Authority then had to determine whether the woman was unjustifiably dismissed. In this case there was no doubt there was a dismissal as she was told not to come back to work. Furthermore, it was clear that the dismissal was procedurally unjustified.

The two cases above seem to conflict in terms of using pre-employment practical assessments as part of the recruitment process with an employee who is later offered an employment agreement containing a 90 Day Trial Period. It is generally accepted that an employer can have a prospective employee undertake a short unpaid work assessment before being offered a job, without the person becoming an employee. It seems logical that the same should apply for a person who later agrees to a trial period, and that they would not be considered to have been previously employed by the employer. However as the cases here show, the issue is uncertain. Therefore, employers should be aware of the risks involved in using such arrangements, and ensure that the time spent is unpaid, that no offer of employment is made before the assessment, that it is not called a ‘trial’, that is only long enough as necessary for the person to demonstrate their skills, and clearly shown to be part of the interview/assessment process.

 

 

 

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

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