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Changes to The Employment Relations Act 2000 on 12th Dec 2008 Regarding The 90 Day Trial Period

What is a Probationary Period?

Probationary period can also be known as a trial period where the employer and employee discuss and agree to before the employee is confirmed in that position. The probation period provides time for the employee to show the employer that they have the suitable skills, and ability for the position. Any employer and employee wish to have a probation period, they must agree to this in writing at the start of employment and have agreed on a date to review the employees employment at the end of this probationary period. Although the employee is on probation, this does not affect their statutory entitlements to annual holidays, sick leave etc.

During the probation period, the employer should act fairly and reasonably in all matters and the employer needs to clearly state expectations, therefore, enabling the employee to be aware of their employers expectations of them within this role and that they will be under close critical assessment. It is good practice to mark the end of the probation period by advising the employee that the probation period has been successfully completed, for example by holding a meeting to discuss progress and/or writing to the employee confirming the successful completion of the probation period.

Probationary Periods under the Employment Relations Act Prior to 12th Dec 08

Under section 67 of the Act parties to an employment agreement can agree to a probationary period but it must be specified in the agreement. The law relating to an unjustified dismissal still applies to a situation where an employee is dismissed during or at the end of a probationary period. Any decision to terminate employment during a probationary period must be accompanied by fair warning, an obligation to communicate any concerns to the employee and obligations to supervise and review. The employer would be faced with legal proceedings by the prospect of the employee being able to raise a personal grievance under the Employment Relations Act.

Changes to the Employment Relations Act 2000 on 12th Dec 2008 regarding the 90 Day Probationary Period

The changes to the Employment Relations Act 2000, were passed on the 12th December 2008 relating to trial periods, however this change in legislation will come into effect on 1 March 2009.

Employers will only be allowed to enter into trial periods from 1 March 2009. Only employers who have 19 or fewer staff can offer trial employees to new staff members.

Trial periods can only be entered into with an employee, only if the employer has never employed that employee before. The trial period must be agreed to in writing in accordance with good faith as part of a written employment agreement and signed by both parties and can last up to 90 calendar days.

During the trial period, an employee has access to all the employment rights afforded to any other employee, including access to mediation services, and rights regarding health and safety, pay, etc. During this period an employer may terminate the employee’s employment, and the employee may not pursue a personal grievance on the grounds of unjustified dismissal. However, the employee may pursue other personal grievances, on the grounds specified in sections 103(1)(b) to (g) of the Employment Relations Act. These provisions relate to matters such as discrimination, racial or sexual harassment, duress in relation to membership (or non-membership) of a union etc.

Employers must comply with any provisions in the employment agreement regarding notice, including the period of notice that must be given and whether notice must be in writing. Notice must be given within the trial period, even if the actual dismissal doesn’t become effective until after the trial period ends. Existing provisions for probationary periods of employment in the Employment Relations Act 2000 will remain.

basic points for Small to Medium Sized Enterprises who now have option of 90-day trial period

From 1 March employers in small to medium sized businesses will have the option of taking on new staff on a trial period for up to 90 days. This will allow employers to test a new employee’s suitability for permanent employment, without the risk of legal proceedings for unjustified dismissal if employment is terminated.

Eligibility

To be eligible employers must employ 19 or fewer employees. Employees can be full time, part-time, fixed term or casual as long as the total number of employees does not exceed 19.

Trial periods are only for new employees

Only new employees can be put on a trial period. If employees have previously worked for an employer, they can’t be put on a trial period. For example, an employee who was employed for 6 months in 2006 and then applies for a position with that same employer in 2009 can’t be put on a trial period.

Trial period must be in writing

Whether or not an employee accepts a trial period is a matter of agreement between the employer and the new employee. However, if a trial period is agreed to, it must be specified in a written employment agreement. A trial period that is not recorded in writing is invalid.

Obligations

During a trial period an employee has the same protections regarding pay, conditions, leave, and health and safety as other employees.

Ending a trial period

If an employee successfully completes a trial period, his/her employment continues as agreed in their written employment agreement and the protections under the Employment Relations Act, including the ability to raise a personal grievance, apply. If the employee is unsuccessful during the trial period and employment is terminated, the employer is under no obligation to provide a reason for the dismissal. Nor will the dismissed employee be able take a personal grievance for unjustified dismissal; however, a personal grievance may be taken if issues of discrimination, such as racial or sexual harassment, arise.

An employee cannot raise a personal grievance for unjustified dismissal if he or she is dismissed during the trial period. This rule applies even if the notice of the dismissal is given before the end of the trial period and the employee’s last day of work is after the end of the trial period.

Notice

If an employer dismisses an employee working on a trial period, the notice must be given during the trial period, even if the dismissal does not become effective until after the trial period ends. If the employment agreement does not have a notice period, the employer must give reasonable notice of the dismissal.

This information was supplied by the Department of Labour.

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Disclaimer: This information has been written for and submitted to HRINZ for publication and has been published in good faith for the general information of HRINZ Members of the Institute. HRINZ accepts no legal responsibility for the contents of the Knowledge Base and appropriate professional advice and assistance should be sought in particular cases.

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