Trial Periods - The Importance of a Prior Signed Employment Agreement 09 Jun 2012

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.

For an employer to rely on a trial period however, recent case law suggests that either:

The case of Smith v Stokes Valley Pharmacy is an example of the first proviso. The employee had been employed by the previous owner of the pharmacy until the business was sold and transferred to a new employer. The new employer interviewed the employee, advised her orally that she had “got the job” and gave her a draft agreement. That draft agreement, which the employee took home, contained a 90-day trial provision. The employee started work the day before she signed the employment agreement. After some issues in her employment, the employee was dismissed, some 70 days into the 90-day period.

The Court held that the employee was not prevented from bringing a personal grievance for unjustified dismissal on several grounds. The included the finding that the employee was not a new employee when she signed up to the agreement and the 90-day trial period, as she had started work for the new employer the day before. The trial period must start “at the beginning of the employee’s employment”.

Simmons v Collins Stainless Steel Fabricators Ltd is an example of the second proviso and was decided after Smith v Stokes Valley. Here the Court held that the employee was prevented from bringing a personal grievance for unjustified dismissal. This was even though they signed their employment agreement containing the trial period (which they had been given a copy of before starting work) after they started work. The Court held that the difference here was that the employee had been told before starting work that his employment was subject to a 90-day trial period, and he had agreed to it.

The moral of the story is – if you, as an employer, want to rely on a 90 day trial period, make sure any new employee signs their employment agreement containing the trial period before starting work. Although you may still be protected if an employee did not sign an agreement within this timeframe, it appears you would still need to ensure (at the very least) that you have proof that a written agreement containing the trial period was given to the employee, that the trial period was expressly brought to their attention and that they agreed to it, all before they began work.

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