Immediate termination under 90 day trial period invalid…

The Employment Court has upheld the Employment Relations Authority in deciding that a nil termination period under a trial provision was invalid.  The 90 day trial provision provided that the notice of termination could be immediate. 

The ERA and the Court both concluded that wording in the Employment Relations Act of notice of termination means giving advance notice, or a notice period.  It did not mean immediate termination, which only applies to serious misconduct.  The Court held that Parliament would have said so, if it intended to allow a period of notice to mean immediate termination, which is really no notice.  This finding was supported by the obligations of good faith and the acknowledgement of the inequality of power when bargaining and working under a trial provision.

A trial provision which provided for immediate termination, therefore did not comply with section 67B(1) and was invalid.

Because a proper process had not been followed for the employee’s termination, their dismissal was unjustified and the Court upheld the $15,000 compensation award made by the ERA.  It also upheld the calculation of lost wages, except that wages earned following termination should have been deducted from the lost wages set by the ERA.

The Court specifically said it was not making any comment on whether a short notice period would suffice, for example, one hour or one day.  It left open decisions on those matters for any future cases on trial provisions which provide for such short notice.

If employers want to be certain as to the length of notice required, they should provide either for the same notice period as applies for any other terminations in the employment agreement or a reasonable period of notice, for example, at least one week.  However, what is reasonable in the circumstances, will depend on the particular facts in each case.




Alan Knowsley
Employment Lawyer
Wellington