Worker says 90-day clause was legally flawed but employer argues dismissal was valid
The Employment Relations Authority (ERA) recently dealt with a case involving a machinist who was dismissed during what his employer claimed was a valid 90-day trial period, raising important questions about the technical requirements for trial period provisions in employment agreements.
The worker argued that his dismissal was unjustified, claiming the trial period provision in his employment agreement was invalid due to multiple technical failures. He maintained that he had not been properly advised to seek independent advice about the agreement and that proper written notice procedures were not followed during his dismissal.
The employer defended the dismissal, arguing that the worker was subject to a valid 90-day trial period under the Employment Relations Act 2000 and that his termination was lawful. The company maintained that performance concerns justified ending the employment relationship during the trial period without following standard dismissal procedures.
Employment agreement creates legal disputes
The worker had been employed as a machinist from 31 July 2023 until his dismissal on 30 August 2023, barely one month into the role. Conflicting evidence emerged about when the employment agreement was actually signed, with the worker claiming he took it home to consider while the manager insisted it was signed during their meeting on 13 July 2023.
The employment agreement contained a trial period provision stating that "a trial period will apply for a period of 90 Days employment to assess and confirm suitability for the position" and that "during the trial period the employer may terminated the employment relationship, and the employee may not pursue a personal grievance on the grounds of unjustified dismissal." However, this provision would later come under scrutiny for multiple technical deficiencies.
The worker's evidence was that the manager told him to "read it and that, if he and his wife were happy, then he could start work on 31 July 2023." The worker maintained he took the agreement home and only signed it after discussing the offer with his wife, contradicting the employer's version of events.
Performance concerns lead to sudden dismissal
After approximately one month of employment, the employer decided to terminate the worker's employment citing performance issues. The manager detailed "various issues and concerns relating to [the worker's] abilities" and contended that the worker "was not able to perform the basic tasks of a CNC Machinist."
The circumstances of the dismissal became disputed, with the worker claiming the meeting "occurred in the wash area and lasted about five minutes" while the manager claimed "the meeting was held in his office and lasted approximately 30 minutes." The worker said when he asked why he was being dismissed, the manager blamed another employee's dislike of him.
A termination letter was emailed the following morning confirming the dismissal under the 90-day trial provision. The letter stated: "It is with regret that we have to terminate your 90 day employment trial contract" and provided two weeks' pay in lieu of notice.
Authority examines trial period technical requirements
The ERA conducted a detailed analysis of whether the trial period provision met the strict legal requirements under the Employment Relations Act 2000. The authority found multiple fatal flaws that rendered it invalid. One critical issue was an incorrect legal reference, as the ERA noted: "In relation to the reference to s 67A(5) of the Act in the relevant clause, there is currently no such provision in the Act."
The ERA determined that "given the restriction of rights that an effective trial period provision brings with it, the requirements in the Act must be strictly met" and found "that the mistaken reference is fatal to [the employer's] position that there was a valid trial provision entered into." This technical error alone was sufficient to invalidate the entire trial period.
The authority also found that the worker had not been properly advised to seek independent advice as required by law. The ERA stated: "I am not satisfied that the limited statement made by [the manager] at the 13 July 2023 meeting, to the effect that [the worker] could talk to his wife, was sufficient to comply with the obligation" to advise about seeking independent advice.
Employer concedes procedural fairness failures
When the trial period provision was found to be invalid, the employer essentially conceded that standard dismissal procedures had not been followed. The ERA noted: "[The employer] conceded in submissions that if [the worker] was not barred from bringing a personal grievance claim, then it would follow that the procedural fairness requirements would not be satisfied."
The authority found that "the dismissal occurred absent any formal notice of [the employer's] concerns, [the worker] was not advised that his employment might be terminated, and he was not provided any formal opportunity to respond to the concerns prior to termination of his employment." The ERA determined that "there was no formal process at all as would ordinarily be expected."
Regarding the performance concerns, the ERA found: "While I acknowledge [the employer] held some genuine concerns as to whether [the worker's] qualifications and experience matched his abilities, I am not satisfied that [the employer] took steps that could establish a proper basis on which to conclude that dismissal was appropriate."
ERA: Is there unjustified dismissal?
The ERA concluded: "I find that the dismissal was both procedurally and substantively unjustified." The authority awarded compensation for the impact on the worker's wellbeing and financial situation, noting evidence that he had "difficulty sleeping, and was nervous, sad, and irritable" following the dismissal.
The ERA ordered the employer to pay "$15,000 as compensation for humiliation, loss of dignity, and injury to feelings" and "$1,760 as compensation for lost wages." The worker had secured alternative employment at a lower rate, suffering a reduction from $37.00 to $33.00 per hour.
The authority also imposed a penalty of "$800 for failing to immediately provide a copy of [the worker's] wages and time record" when requested. The ERA found no contribution by the worker to his situation, stating:
"I do not consider any of [the worker's] actions or conduct could be said to be meaningfully relevant such as would establish a proper basis for a reduction on account of contribution." The case demonstrates the strict technical requirements for valid trial periods and significant consequences for employers who fail to meet these standards.
