The 90 day trial period - first test!

Here is an article that I wanted to share about the new 90 day law here in New Zealand.  For approx 12 months NZ employers who have 19 or less staff have been allowed to dismiss new staff within the first 90 days of their employment for no reason whatsoever - and the employee does not have the right to take a personal grievance.

This is the first case in which the law has been tested and it makes for good reading.

In this particular case the employee had been working at the Pharmacy and was transferred when new owners took over.  For me - this is really straightforward and one has to wonder whether the new owners had their heads screwed on straight - the employment agreement that they provided to the "new" employee did not have the 90 day requirement outlined anywhere and further more - trying to dismiss someone as "not experienced" when she has been performing the exact same role for over two years is a bit of a falicy.


Quite often people who purchase businesses are really skilled in whatever the business is - such as Pharmacy, Hairdressing or Plumbing etc but not so skilled at managing a business - they really should seek legal advice first from such employment groups as ECCC or a lawyer.  - Or even just ask Aunty Google (double checking the relevance of the sources first of course) who will be able to tell you anything for Free!!!

Take the time to research a little bit people - you will save yourself alot of heartache, embarrassment and furthermore bad PR!!!

If you're not a union - you never want to be a test case!!!

Employment Court rules on first 90-day trial period case



NZ30/8/201026/8/2010


Digest:


Smith v Stokes Valley Pharmacy (2009) Ltd EC Wellington [2010] NZEMP 111

 This first 90-day trial period judgment (from the Employment Court) makes key observations, some of which (not all, due to space constraints) are outlined below.

 Smith had been employed by the pharmacy for about two and a half years before it was sold to new owners. The new owners offered Smith a job, and she was given a draft employment agreement a few days before they took over the business. The agreement included a 90-day trial period provision. On her second day of working for the new owners, Smith signed the employment agreement. Before signing, she expressed concern about the trial period provision, but she was assured that she should not worry because it was in all the agreements, and she wasn't being singled out.

 As well as the statements required under section 67A of the Employment Relations Act 2000, the trial period clause included provision for regular performance appraisal meetings, as well as full training. The termination clause of the employment agreement provided for four weeks' notice of termination by either party, but that the company could terminate Smith's employment without notice in certain circumstances, such as serious misconduct.


During her trial period, Smith was provided with informal feedback while she was being trained, but there were no regular performance appraisal meetings. Almost 70 days into her trial period, Smith was summarily dismissed. When asked, the owners were reluctant to reveal the reasons for Smith's dismissal (they maintained that they didn't have to under the trial period legislation), but said that she was inexperienced and not what they were looking for. Smith claimed that she was unjustifiably dismissed and unjustifiably disadvantaged in her employment. Her case went to the Employment Court.



The Employment Court held that Smith was not a "new employee" for the purposes of section 67A. She had worked for the employer for one day under her previous terms and conditions with the previous business owners, before the new employment agreement was signed. The trial period was therefore not one in compliance with section 67A. Even ignoring this legal position, Smith could hardly be described as a "new" employee except in the narrow and technical sense that she had not been previously been employed by the new owners who purchased the business of her previous employer. Furthermore, the employment agreement required the employer to give four weeks' notice of dismissal, but Smith was dismissed without notice. For these reasons, Smith was entitled to challenge her dismissal.

 The Court also held that Smith was entitled to bring a personal grievance for unjustified disadvantage in employment and/or a common law claim for breach of contract. This was independent of her ability to bring an unjustified dismissal grievance because her employer did not comply with sections 67A and section 67B.


The Court held that Smith's dismissal was unjustified, both in terms of process and substance. In terms of process, the employer breached its good faith obligations by not giving her notice of the dismissal meeting, not telling her at any time of her alleged inadequacies, not offering her the opportunity to bring a representative, etc. In terms of substance, the employer failed to comply with its contractual obligations for training, performance assessment, and improvement it had included in the employment agreement. The parties were ordered to attempt to settle on the remedies, or apply for a decision if they were unable to do so.