90 Day Trial Clause

All employers can now employ new staff on 90-day trials, and can dismiss them – without any reason – if the employer doesn’t want to continue employing them.

Sounds like a silver bullet, doesn’t it!

In reality, the 90-day trials have a number of serious shortcomings and traps for employers. The reality is that because the 90-day trial deprives an employee of their right to bring a personal grievance it will be interpreted against the employer. The employer will not be given the benefit of the doubt. Let’s go through the fishhooks.

- An employee on a 90-day trial cannot sue their employer for unjustified dismissal but there is nothing preventing them suing for unjustified disadvantage.

So, if an employer dismisses an employee in a manner that causes hurt and humiliation, the employee can still sue for hurt feelings compensation.

So, what might amount to “a manner causing hurt and humiliation”? The obvious and most common example is leaving it until the 89th day to tell the employee they didn’t survive the 90-day trial. Another example might be to allow the employee to believe they were performing satisfactorily and that they would survive the trial, only to be told “You’re performance isn’t up to scratch so we are terminating your employment.”  Another example might be the way the employer advises the employee.  For example shouting “P.... off, you’re useless!” in front of other employees would probably do it.

The majority of awards for hurt feelings are less than $10,000, and there would be no claim for lost wages, but the employer still faces the inconvenience and expense of a personal grievance claim for unjustified disadvantage.

- The 90-day trial clause does not excuse the employer from treating the employee in good faith.

If the employer doesn’t do so, the employee could raise a personal grievance for unjustified disadvantage and could seek penalties.

So, what does the duty of good faith entail? Well, entire books have been written on this very subject but at its absolute minimum it:

Requires the parties to an employment relationship to be active and constructive in establishing and maintaining a productive employment relationship in which the parties are, among other things, responsive and communicative.

What does the employer’s duty of good faith require in relation to a 90-day trial?

Before the employment commences, the duty includes:

• Giving the employee plenty of time to seek advice on the clause before signing it

• Genuinely considering the employee’s comments about the trial period

• Not down-playing the significance of the 90 day trial

After employment has started, the duty includes:

• Advising the employee if the trial period is not going well

• Upon termination, discussing the reasons why the employee is being dismissed

- An employee could also, despite the 90-day clause, sue for unjustified disadvantage or unjustified dismissal claiming that he or she was discriminated during the 90-day trial, or dismissed within the 90 days for reasons of discrimination.

The grounds of discrimination are listed in the Human Rights Act 1993.  They are: sex, marital status, religious belief, ethical belief, colour, race, ethnic or national origins, disability, age, political opinion, employment status, family status and sexual orientation.

- The 90 day trial only applies to new employees, so if the employee has been an employee of the company at some earlier time, or if the employee started work before signing the agreement containing the 90 day clause, the trial period will be ineffective.

The employee must sign the employment agreement containing the 90 day clause before starting work, otherwise the clause is ineffective.

- Conversely, the trial period might (perhaps unintentionally) be found to have begun before the employee actually starts work.

For example if the employee signs the agreement several days or weeks before the start date. For this reason an employer would be wise to state in the 90-day clause that the trial period starts on the first day the employee actually starts work.

- The 90 days must be stated and calculated exactly. For example “3 months” is not 90 days.

 

- The employer must give notice of termination within the 90 days, although the notice period itself may extend beyond the 90 days.

In a slightly more tricky fact situation, an employer could dismiss for serious misconduct within the 90 days.  The employer would have to justify the dismissal and would have to demonstrate it carried out a fair process (which defeats the purpose of the 90-day clause) but a serious misconduct dismissal (if the employment agreement allows it) removes the employer’s obligation to give notice or pay in lieu of notice. 

An employer should not just stick clauses into an employment without getting specific legal advice, so the following sample clause is provided as general advice only.

90 day Trial Period Clause: Sample Clause

  1. The first 90 days of your employment with us will be a trial period, starting from the beginning of the day on which you start work.

  2. This means that, during the 90 days, we are allowed to give you notice of dismissal if we form the view that you are unlikely to be a satisfactory appointment to our permanent staff.  Providing we give notice to you within the 90 days, your employment may be terminated before, at, or after the end of the trial period.

  3. Although the notice period for permanent employees is [one month], the notice period during the 90 day trial is [two weeks].  We may pay you in lieu of notice.

  4. We may also dismiss you without notice for serious misconduct.

  5. If we give you notice of dismissal, you are not entitled to bring a personal grievance or other legal proceedings in respect of the dismissal.

  6. We are not required to give you reasons for your dismissal but, in good faith, we will advise you as early as practicable if the trial period is not going well.

  7. If your employment continues for more than 90 days without you having received a notice of termination, the trial provision will cease to have effect and you will automatically be appointed to our permanent staff.
     

For Legal and Strategic Advice on the 90 Day Trial Clause, Phone Me for Free Initial Advice

I can offer free initial advice during the day, and after hours, to help you make sense of your situation.

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mrobins@workplacelaw.co.nz