The 90 Day trial period: What dictates its application in court
Section 67A of the Employment Relations (2000) Act was introduced to enable Employers to take on new Employees in a more risk-free environment. The idea behind Section 67A is to encourage Employers to take on more Employees, knowing that, should the Employment Relationship not work out within the first 90 days, the Employer can terminate the Employment Relationship without the risk of the Employee raising a personal grievance and then dragging the Employer through a potentially very time consuming and costly resolution process.
There are very strict parameters around Section 67A to ensure an Employer does not use the 90-day trial period as a mechanism to chop and change Employees at will. Significant decisions from the Employment Court have defined the use of the 90-day trial period clauses even further. Ramifications of this are that there are many Employers/Employees who believe the Employment Agreement is subject to a 90-day trial period which would not stand up to scrutiny in court. This is not normally discovered until there is an Employment Relationship problem and, due to the fact that it is impossible for an Employer to retrospectively fix any defects in their 90-day trial period clause, this becomes an advantage to the Employee.
In Blackmore v Honick Properties, Mr Blackmore started work at 7.00am and was given an Employment Agreement to sign at 8.00am. The court determined that Mr Blackmore became an Employee at 7.00am and when signing his Employment Agreement at 8.00am he was already an existing Employee and therefore not subject to a 90-day trial period clause.
For a 90 day trial clause to be valid, the following must apply:
- The Employee must have not worked for the Employer previously.
- The Employee must be advised in writing that the employment is subject to a 90-day trial period before the Employee accepts the offer of Employment.
- The Employee must be advised in writing that they have the right to seek independent advice and they are given adequate time to seek such advice.
- The written clause in the Employment Agreement must include specific wording as per Section 67A of the Act.
- The Employment Agreement needs to be signed by both parties or the Employer needs to be able to show that they have taken multiple significant steps to get the Employee to sign the Agreement prior to work commencing.
- Notice of termination of the Employee needs to be given to the Employee within the 90 days.
For an Employer it is best practice to get advice on the use of this clause and, should you wish to include this clause in an Employment Agreement, that the Employment Agreement is executed by the Employee prior to commencement of work.
For an Employee that is terminated under this clause it is best to get advice as to the validity of the clause in your particular situation.