ERA finds company failed consultation requirements despite believing in valid provision
The Employment Relations Authority (ERA) found that an operations manager was unjustifiably dismissed when his employer relied on a trial period provision that exceeded the 90-day statutory limit and failed to meet legal requirements for valid trial periods.
The manager claimed he was dismissed outside the trial period timeframe and that the provision was invalid, while also seeking payment for work performed before his official start date.
The company argued the trial period was valid, and the manager was dismissed within the allowable timeframe after performance concerns arose.
Employment agreement and trial period provisions
The operations manager was recruited in June 2023 for a newly-created General Manager Operations role at an aggregates company.
After negotiations on salary and restraint of trade terms, the parties agreed on a start date of 19 July 2023, with the manager requesting this timing to handle personal affairs before assisting with a tender due on 21 July.
The employment agreement contained a trial period clause stating the employee would be employed "on a trial basis for the first 3 months" with either party able to terminate on one week's notice.
The provision included detailed requirements for the employer to raise concerns, give the employee an opportunity to respond, conduct monthly performance reviews, and discuss steps to assist the employee in meeting expectations.
The manager signed the agreement on 30 June 2023, with the general manager counter-signing on 3 July but backdating his signature to 30 June.
The contract specified a minimum 45-hour work week and annual salary, with the trial period provision intended to allow assessment of the manager's suitability for the specialised role.
Pre-employment work and start date disputes
Before his official start date, the manager attended a quarry managers' conference from 5-7 July 2023 in place of the managing director, with the company paying for flights, accommodation and conference fees.
The manager also claimed to have worked on tender preparation from late June through to the tender submission on 19 July, seeking payment for 61 hours of pre-employment work.
The ERA found the manager did not start working for the company until 17 July 2023, when both parties agreed that tender work began in anticipation of the 19 July submission deadline.
The Authority determined that the earlier activities, including conference attendance and preliminary tender discussions, were undertaken voluntarily by the manager to prepare for his role and make a good impression on his future employer.
The ERA concluded neither party had the expectation that pre-employment activities would be paid work or signal the beginning of employment.
The manager had not requested payment for these activities during employment negotiations, his first pay period, or subsequent pay cycles until raising his personal grievance, leading the Authority to find no entitlement to pre-employment wages.
Performance concerns and dismissal process
The company raised concerns about the manager's working hours on 14 August 2023, requesting detailed timesheets showing hours worked and upcoming work plans.
Further communications occurred about reporting requirements, with the manager sending a four-page email on 16 September outlining operational concerns and difficulties with his relationship with the general manager.
On 18 September 2023, the manager rolled a vehicle at a quarry site, requiring an incident report and over two months for repairs.
Following a site visit on 15 September, where company directors observed health and safety concerns, they discussed terminating the manager's employment under the trial period provision.
The company terminated the manager's employment on 2 October 2023, citing eight reasons, including unaddressed performance issues from the August review, quality problems, safety concerns, machinery damage, lack of focus and inability to work effectively with senior management.
The dismissal occurred 77 days after the manager's actual start date of 17 July 2023.
Trial period validity and legal requirements
The ERA found the trial period provision invalid for failing to meet statutory requirements under section 67A of the Employment Relations Act.
The three-month period exceeded the maximum 90-day limit allowed by legislation, equating to 92 days in the circumstances of this case.
The Authority noted that trial period provisions must be interpreted strictly as they remove long-standing employee protections.
More significantly, the ERA determined that the provision failed to state that the employer could dismiss the employee during the trial period or that the employee would be unable to bring personal grievance proceedings for such dismissal.
Instead, the provision operated on a mutual basis, allowing either party to terminate with notice, while including detailed procedural requirements for performance management.
The ERA concluded the strict requirements for valid trial periods had not been met, making the provision legally ineffective under sections 67A and 67B of the Employment Relations Act.
This meant the manager was not prevented from bringing a personal grievance for unjustified dismissal, requiring assessment under standard employment law principles.
Dismissal assessment and procedural failures
The ERA found the dismissal was substantively justified due to a breakdown in the working relationship between the manager and general manager in the small two-person operation.
The Authority accepted that communication difficulties and differing expectations about the role had crystallised into an inability to work cooperatively toward company objectives.
However, the ERA determined the dismissal was procedurally unfair because the company failed to meet notice and consultation requirements under the Employment Relations Act.
While the company had raised time-keeping concerns with the manager in August, it failed to transparently communicate other performance concerns before deciding to dismiss him.
The ERA found the company decided to dismiss the manager before the 2 October meeting without giving him a reasonable opportunity to respond to concerns or genuinely considering his explanations.
The Authority noted the company invited the manager to the meeting without disclosing its purpose or allowing him to prepare or bring support, then handed him a prepared dismissal letter rather than engaging in meaningful consultation.
Compensation and wage arrears determination
The ERA awarded the manager $12,000 compensation for humiliation, loss of dignity and injury to feelings, reduced by 20 percent for contribution after finding his email to the managing director was not constructive and contributed to the relationship breakdown.
The Authority also awarded two months' lost wages totaling $23,332, similarly reduced by 20 percent for contribution.
For wage arrears claims, the ERA rejected the manager's claim for 61 hours of pre-employment work but upheld his claim for underpayment during the notice period.
The Authority found the company should have paid the manager's full weekly salary of 45 hours rather than only 20 hours recorded by vehicle monitoring systems, awarding $1,495.73 plus holiday pay.
The total award comprised $9,600 compensation, $18,665.60 lost wages, $1,615.39 notice period arrears with interest, and $1,300 in penalties for wage protection and record-keeping breaches.
The ERA ordered $650 of the penalty paid to the manager and $650 to the Crown, with all amounts payable within 28 days.
