IT employee argues company violated employment law by dismissing him 121 days into role
The Employment Relations Authority (ERA) recently dealt with a personal grievance claim involving a worker who was dismissed after what his employer claimed was an unsuccessful trial period, despite the dismissal occurring well beyond the statutory 90-day limit.
The worker argued that his dismissal was unjustified because it happened 121 days after his employment started, breaching the maximum 90-day trial period allowed under employment law.
He also claimed that his employer failed to follow proper procedures before dismissing him, giving him no warning about performance concerns or an opportunity to respond to any issues.
The case raised important questions about compliance with trial period provisions and procedural fairness obligations.
Trial period compliance under employment law
The worker started employment with an IT company on 9 April 2024 as a business development manager.
His employment agreement contained a standard 90-day trial provision stating that his employment was "on a trial basis for the first 90 days of employment" and that during this period, employment could be terminated with one week's notice.
However, the employer dismissed the worker on 7 August 2024, which was 121 days after his employment started.
This timing created a significant legal problem for the employer, as it exceeded the statutory maximum trial period allowed under Section 67A of the Employment Relations Act 2000, which permits trial periods of "90 days or less."
The dismissal letter referenced the worker's "probation period" as being unsuccessful, despite the employment agreement containing no probationary clause.
The ERA noted that "the employment agreement is silent as to any probationary period, so it is unclear why [the employer] would dismiss in reliance on a non-existent probationary clause."
Statutory requirements for valid trial periods
The Employment Relations Act 2000 provides specific requirements for 90-day trial periods. These provisions can only be entered into by an employer and an employee who has not previously been employed by that employer.
The trial provision must be written and state that for a specified period not exceeding 90 days, the employee serves a trial period during which the employer may dismiss the employee.
The Act specifies that these protections only apply if an employer terminates the employment "by giving the employee notice of the termination before the end of the trial period."
In this case, the worker was given notice 121 days after his employment started, well beyond the statutory limit.
The ERA emphasised that as trial periods restrict what would otherwise be an employee's right to challenge their dismissal as unjustifiable, "the requirements of a 90-day provision must be strictly complied with."
The ERA observed that "any agreement to extend a trial provision beyond 90 days' duration would be inconsistent with the provision of s 67A(2)(a) of the Act."
Procedural fairness failures during termination
The worker's dismissal occurred during a video conference meeting on 7 August 2024. He had received an email invitation to attend the meeting the previous day, but this was routine since he regularly attended meetings with the Perth team.
No details were provided about the meeting's purpose, and there was no indication that his employment was at risk.
During the meeting, the worker was simply told that he "had not passed [his] trial period, and that was the reason [he] was being dismissed."
This announcement came without any prior warning. The worker testified that he "was never made aware that what [he] was doing and how [he] was doing it was not what was required in [his] role."
The ERA found that the employer breached multiple procedural fairness requirements. The dismissal was described as "abrupt" with no opportunity for the worker to obtain representation or provide input before the decision was made.
The ERA concluded that "[the employer's] failure to meet any of the minimum procedural fairness tests renders [the worker's] dismissal unjustifiable."
Employment background and mitigation efforts
The worker's employment began after he signed an employment agreement on 7 March 2024. He was required to attend an induction at the Perth office from 9 to 11 April 2024, for which he was paid normal salary. His annual salary was $175,000.
Following his dismissal, the worker demonstrated reasonable efforts to mitigate his losses by promptly applying for 14 new roles. He successfully obtained new employment on 26 September 2024, approximately three weeks after his notice period ended.
However, the worker was forced to accept a lower salary of $150,000 per annum in his new position. This pay reduction became part of his compensation claim, as he sought reimbursement for the salary differential over an eight-week period.
Lost wages compensation under employment law
The ERA awarded the worker three weeks' lost remuneration totalling $10,096.15, plus an additional $4,166.66 for the salary differential between his old and new positions. Holiday pay and KiwiSaver obligations were also ordered to be calculated and paid on these amounts.
Under the Employment Relations Act, if the ERA determines that an employee has lost remuneration as a result of a personal grievance, it has a statutory obligation to order the employer to pay the lesser of a sum equal to the lost remuneration, or three months' lost remuneration.
The worker's evidence about his efforts to mitigate losses remained unchallenged due to the employer's non-participation in the proceedings, highlighting the importance of employer engagement in ERA processes.
Personal impact and compensation awards
The worker provided evidence of significant personal impact from his dismissal, describing feeling "confused and disappointed" and that the circumstances were "embarrassing" and "humiliating."
He experienced considerable anxiety about his financial situation and had to make changes to his insurance cover to reduce expenses.
The dismissal's impact extended to his family life, as he struggled to provide for his three children and could no longer afford certain extracurricular activities.
He described feeling "as if the rug had been pulled from underneath him" due to the sudden nature of his dismissal.
The ERA awarded $17,500 in compensation, referencing the Employment Court's guidance that such awards "should be, although not over-generous, nevertheless fair, realistic and not miserly."
No deduction was made for contributory conduct, as the ERA determined that "the unjustifiability of [the worker's] dismissal from his employment has been established in [the employer's] failure to follow statutory requirements."
Employer non-participation consequences and costs
Throughout the ERA investigation, the employer demonstrated a pattern of non-engagement. The company director initially confirmed availability for a case management conference but failed to attend, despite being warned that proceedings would continue in his absence.
The employer failed to engage with Employment Mediation Services, preventing any opportunity for early resolution.
The employer also failed to lodge witness statements or participate in the investigation process. At the investigation meeting, the employer neither attended nor provided any reason for non-attendance.
The ERA noted that "[the director's] mobile telephone number appears to have been disconnected, or his device has been set to block certain phone numbers."
The ERA proceeded in the employer's absence, noting they were "satisfied that [the employer] was aware of the date and time of the meeting, with no good cause provided for its non-attendance."
The ERA ordered the employer to pay $1,200 towards the worker's representation costs plus a $71.55 filing fee, bringing the total amount ordered to $31,762.81.
