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How do I ensure the 90 day trial period works for me?

Posted on August 9th, 2011

What if you couldn’t rely on the 90 day trial period if your employee worked for half a day before signing their employment agreement?    This recent determination from the Employment Relations Authority makes quite interesting reading.

Contact me if you are employing staff to ensure you get it right first time.


Parkes v Squires Manufacturing Ltd [2011] NZERA Wellington 22, 11 February 2011

A company could not rely on its 90-day trial period clause because the employee worked for half a day before signing the intended employment agreement, the Employment Relations Authority has determined.

Parkes was offered as a job as a machinist. She was given a draft employment agreement that included a trial period provision under sections 67A and 67B of the Employment Relations Act 2000. She started work and signed the employment agreement after lunch on her first day.

The factory made outdoor clothes and Parkes’ previous experience was sewing undergarments. The two have different manufacturing requirements and it wasn’t long before the employer became concerned about her skills. Two days after she started work, Parkes was dismissed in reliance on the trial period clause. She was told that she would be given one weeks’ pay in lieu of notice. The employer signed the employment agreement five days’ after Parkes’ dismissal.

The Authority determined that as the terms of the trial clause had to be in writing and signed off at the commencement of the employment relationship (and not inferred as an “intended” or draft agreement), the trial period clause did not comply with section 67A. Parkes started work without the employment agreement being signed by both parties, which meant she was an existing employee, even though she had been working for a very short time before signing. Sections 67A and 67B therefore could not apply, and the company could not rely on the 90-day trial clause in the “intended” agreement.

Noting the employer’s indignation and surprise at the reasoning, because they had been told by the Department of Labour they could apply the trial period clause, the Authority referred to the Employment Court in Smith v Stokes Valley Pharmacy (2009) Ltd, where it was held “Sections 67A and 67B remove longstanding protections and access to dispute resolution and to justice. As such, they should be interpreted strictly and not liberally because they are an exception to the general employee protective scheme of the Act”.

The employer was also not in compliance with section 67B because Parkes was not dismissed on notice. The Authority observed that the Court has held that notice has to be more than simply the advice of dismissal, as it was in this case.

The Authority concluded that Parkes had been unjustifiably dismissed and awarded her 13 weeks’ lost wages and $5000 compensation for hurt and humiliation.

Filed under Employment Agreements |