Employer ordered to pay over $36,000 after unjustified dismissal of employee...

The Employment Relations Authority has ordered an employer to pay $36,000 after it was decided that their dismissal of an employee was unjustified.

The employee signed an employment agreement that contained a 90-day trial clause. This clause stated that the employee could be dismissed with one weeks’ notice, or with payment in lieu of this notice if the dismissal occurred within 90 days of the commencement of her employment.

After working for a few months, the employee was invited to a meeting by her employer. At the meeting, the employer informed the employee that she was being dismissed due to poor job performance. She was also told that she was not entitled to work out, or receive payment for her week of notice period, as the dismissal was within the 90-day trial period.

The employee brought a claim of unjustified dismissal to the Authority.

The Authority had to decide whether the employer had acted as a fair and reasonable employer would have in the circumstances.

The employer claimed that the dismissal was within the 90 day trial period, when the employee had in fact been employed for 106 days at the time of her dismissal.

As well as this, the employee was only advised of the meeting on the day that it happened, and was not given a chance to respond to the decision to dismiss.

Furthermore, the Authority decided that the trial clause was not valid, as it did not comply with the requirements of the Employment Relations Act.

A trial period provision must be in writing, and must state that the employee is not entitled to bring a personal grievance to the Authority in the event that they are dismissed during the trial period. The trial clause in this case did not include this required statement, and the clause was therefore invalid.

The Authority concluded that the employee was unjustifiably dismissed, and ordered the employer to pay $20,000 as compensation for the hurt and humiliation caused by the dismissal, and $16,000 in unpaid wages and holiday pay.

If there is confusion around the proper execution of a 90-day trial clause, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Alan Knowsley & Matthew Binnie

Litigation Team
Wellington