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The law around 90 day trial periods continues to develop. We have previously posted articles on the importance of having an employee sign their employment agreement before their first day of work and also agreeing to a trial period before accepting an actual offer of employment.

A recent case – Allan v Mobile Shop Limited & Anor [[2012] NZERA Auckland 430; 30/11/2012; R Larmer] – has now confirmed the importance of also ensuring a prospective employee is given a real and reasonable opportunity to obtain legal advice on their employment agreement, including the trial period, prior to signing the agreement. If an employer does not, they may not be able to rely on the trial period, even if they have met all other pre-requisites.

The Facts

In the case, the employee claimed he was unjustifiably dismissed from his employment. One of the employer’s arguments was that the employee was prevented from raising a personal grievance due to the 90 day trial period in his employment agreement.

The employee was offered employment but it was not until approximately 2 week’s later that an employment agreement was signed. He then signed the agreement within 20 minutes of receiving it from the employer and was not advised of his right to seek independent legal advice. He started work the next day. His employment was later terminated on the grounds of poor performance.

The Outcome

The Employment Relations Authority considered that the dismissal was procedurally and substantively unjustified for a variety of reasons. Despite there being a trial period in the employment agreement that complied with the Employment Relations Act 2000, the Authority decided that the lack of time given to the employee to seek independent legal advice on the terms of the agreement prior to signing it meant that the trial period clause should be struck out of the agreement.

The Authority confirmed that there is an obligation on an employer to provide a reasonable opportunity for an employee to take independent advice, even if the employee freely wants to sign the agreement immediately and without taking advice. In addition, starting work the day after signing an agreement suggested that there had not been a “real” opportunity to take independent advice/negotiate any terms.

The lessons to take away

If you want to protect your right to rely on a 90 day trial period when employing a new employee make sure:

• You give them a copy of their employment agreement containing the trial period at the time they are offered employment.

• They have a sufficient amount of time after that to take independent advice on the agreement/negotiate its terms with you, if they so choose. In other words, make sure the agreement is not given to them just before they are due to start work!

• They don’t just sign the agreement immediately, even if they want to. You may need to insist that they take the agreement away, unsigned, to be returned at a later date.

Should you need any assistance with this, or with any other Employment matters, please contact Lois Flanagan at Parry Field Lawyers (348-8480).

In June 2012 we posted an article highlighting the importance of employers, who want to rely on a 90 day trial period, ensuring that all new employees sign their employment agreement containing the trial period before their first day of work. The Employment Court has now set out a further requirement, namely that trial periods in employment agreements must be provided to prospective employees at the same time as, and as part of, making an offer of employment to the proposed employee in order for an employer to rely on them.

In Blackmore v Honick, the employee was offered employment in writing and accepted such in writing (by email). The written offer set out a number of the terms of employment and stated that a written contract, containing those terms, would be provided to the employee after he accepted the position. No mention was made of a trial period. He subsequently resigned from his previous employment and commenced work with the employer. At that time (shortly after he started work) he was presented with an employment agreement containing the trial period which he signed. Some time later but before the end of the 90 day trial period, the employer terminated his employment in reliance on the trial period.

The Employment Court subsequently held the employer could not rely on the trial period when dismissing the employee as the employee was already an employee when he signed the agreement.* The Court stated that, in the context of a trial period, an employment relationship begins as soon as an employee is offered and accepts employment. As the employee had accepted the job offer prior to signing the employment agreement, he was not bound by the trial period contained in it.

The Court held further that, in general, in order for employees to be regarded as not having been previously employed by an employer, the trial period must be agreed in writing before the employee begins work. More particularly, trial periods in employment agreements must be provided to prospective employees at the same time as, and as part of, making an offer of employment to the proposed employee in order for an employer to rely on them.

The further moral of the story therefore is if you, as an employer, want to safeguard your ability to rely on a 90 day trial period, make sure that any offer of employment to a new employee is accompanied by something in writing (preferably the employment agreement) setting out the inclusion in the offer of a 90 day trial period, and its scope/terms.

Should you need any assistance with this, or with any other Employment matters, please contact Lois Flanagan at Parry Field Lawyers (348-8480).

* The Employment Relations Act provides that a 90 day trial period can only apply in respect to newemployees.

From 1 April 2011 all employers are able to employ new employees on a trial period of up to 90 calendar days. This means that, subject to certain conditions, an employer can dismiss a new employee within that period without the employee being able to take a personal grievance for reasons of unjustified dismissal. Read more