ERA examines when trial periods are legally binding in employment agreements
The Employment Relations Authority (ERA) recently dealt with a case where a worker claimed she was unjustifiably dismissed and disadvantaged in her employment under the Employment Relations Act 2000.
The worker argued that her employer breached its duty of good faith by coercing her to falsify an employment agreement. She also claimed she was unjustifiably disadvantaged by the breach of her employment agreement.
The case raised questions about the validity of trial periods, proper dismissal procedures, and whether performance concerns were appropriately communicated during employment.
This case emerged from a retail position at an Auckland garden centre. The worker began employment on October 12, 2023, initially working 25 to 32 hours weekly at $25 per hour on what was described as a three-week trial.
While the employer sent an email on October 9, 2023, referencing an attached employment agreement, no evidence of this agreement was presented to the ERA.
The Employment Agreement containing a 90-day trial period was signed on October 23, 2023. As noted in the decision: "What this means in practice is that employers wishing to avail themselves of the opportunities afforded by ss 67A and 67B must ensure that trial periods are mutually agreed in writing before a prospective employee becomes an employee."
The ERA determined there was no valid trial period as the worker was already employed when the agreement was signed.
The ERA heard conflicting testimony about the worker's performance. The buyer for homewares stated that "after the first week she had found [the worker's] attitude had been combative and she was not willing to accept instructions."
However, the store manager confirmed in evidence that "[the worker] had complied with the verbal requirement which was to inform the manager two hours prior to the start of a shift of any absence."
The ERA found that all leave taken by the worker had been properly approved, including Christmas leave that was agreed upon at the start of her employment. The store manager also confirmed he had asked the worker to assist in the outdoor area due to staff shortages.
The Authority noted: "Most significantly I find that [the worker's] belief that she was performing at a satisfactory standard was reasonably held in light of the fact that at no time prior to 6 January 2024 had [the employer] raised any performance concerns with [the worker]."
On January 5, 2024, the employer emailed a dismissal notice citing the trial period provision. After the worker's representative challenged this, the employer attempted to withdraw the dismissal and initiate a performance management process instead.
The ERA found: "combining that decision to rescind with the information that upon a resumption of the employment, a disciplinary process would ensue, fatally added to the fracturing of the trust and confidence that [the worker] had in [the employer] to treat her fairly."
The Authority ordered several remedies including payment for an additional week of notice ($600 gross), lost wages ($8,125 gross), compensation for humiliation, loss of dignity, and injury to feelings ($12,000), and imposed a penalty of $2,500 payable to the Crown.
The ERA stated: "The purpose of penalties is punitive. They are not imposed to remedy the applicant's loss, but to punish the person who has breached a duty under the Act and to condemn that behaviour."