Badly drafted 90-day trial clause costs employer $10,000…

An employer included a 90-day trial period in their employment agreements but did not get the strict legal requirements correct.  They then fired the employee for poor customer service within the 90-day period.

A valid 90-day trial period allows an employer to fire an employee within the first 90 days of employment without reason.  The employee may not raise a personal grievance for the dismissal.

However, it is crucial that the employer complies with strict legal requirements otherwise any dismissal using the trial period provision may be challenged by the employee.

The employee raised a personal grievance.

The Employment Relations Authority held that the clause was defective and could not be relied upon by the employer because:

• The clause did not provide a statement that explained the provisions of the Act as required.
• In the Agreement there was a “yes” and “no” operative provision for the trial clause.  Neither had been ticked.

Because the 90 day trial period provision did not apply the employer was required to act reasonably and fairly.

The employer failed to act reasonably and fairly because they had relied on the 90 day period clause, and failed to follow any process in regard to the dismissal.  There was:

• No investigation into the complaint before the dismissal.
• No raising of the allegation with the employee.
• No reasonable opportunity to respond/comment.
• No discussion on any penalty.
• No consideration of any explanation from the employee before the dismissal.

As a result the dismissal was unjustified and the employee was awarded over $10,000 lost wages and compensation.

If you need assistance drafting your trial period clauses or your employment agreements give me a call on (04) 473 6850.