Fishhook in the 90 Day Trial Period

Business owners will be aware that from 1 April, the 90 day trial provisions have been extended to cover all workplaces.  Previously this provision was available only in workplaces with fewer than 20 employees.

But many business owners may not be aware of this potential snag:

If you wish to include a 90 day trial period in your employment agreement, you must ensure the employment agreement is signed before your new employee steps foot on your premises to start work.

 

Consider the recent Employment Court case Smith v Stokes Valley Pharmacy (2009) Limited. Heather Smith was provided with a draft employment agreement by her prospective employer on 29 September which included a 90 day trial period.  She accepted the position on the basis of the draft employment agreement, and started work on 1 October.  But she did not actually sign her employment agreement until the next day – 2 October.

 

If everyone had lived happily at Stokes Valley Pharmacy for at least 90 days, we would have no cause to discuss the nitty gritty of Heather Smith’s employment on this page.  But all did not go well – and Heather Smith was dismissed on 8 December under the 90 day trial provision in her employment agreement.

Stokes Valley Pharmacy relied on the 90 day trial period for comfort that Heather Smith would not be able to bring a personal grievance in respect of the dismissal.  But after her dismissal, she did attempt to lodge a personal grievance.  And despite the fact that Heather Smith and Stokes Valley Pharmacy had a signed employment agreement with a 90 day trial period, the Employment Court ruled that she was entitled to bring a personal grievance. 

The Court stated that under the Employment Relations Act, trial periods only apply to “an employee who has not been previously employed by the employer”.  Because Heather Smith had worked for one day before signing her employment agreement, she was an existing employee at the time she signed up for the 90 day trial period.  And therefore Stokes Valley Pharmacy could not rely on the trial provisions.

There were some other complicating issues in the Heather Smith case, but the one point from the case I want to make is this:

Regardless of whether you include a trial period, always ensure you have a signed employment agreement with a new team member before they step foot on your premises to start work for the first time. 

And if your new team member has worked even for one day before signing onto the 90 day trial period – or if a past employee applies for a job in your business – then the 90 day trial provision cannot be used.

As best practice, we would suggest you go one step further and make it very clear at the time a job offer is made that it will be subject to a 90 day trial period.  Remember that the 90 day trial period provisions do not apply by default – a trial period must be explicitly agreed up front and clearly stated in the employment agreement.