Graeme Riach – Harmans Lawyers

In March last year the National Government introduced a change to the Employment Relations Act which allows some employers to have a “free look” at new employees.  The amendment (s67A and (B)) permits staff to be taken on for a 90 day trial period and, provided notice is given before the expiry of that period, the employment can be terminated without the possibility of a personal grievance being faced by the employer.

There are some important things to note for employers seeking this protection:

• It is only available to employers who employ 20 employees or less (including the new employee).  There is a possibility that this limit will be extended to larger employers but at present the limit remains at 20.
• It does not apply to employees who have been employed by the employer before (so consecutive trial periods for the same employee cannot be utilised)
• The employment agreement must contain an appropriately worded provision – that is it does not apply to all new employees – unless they have a suitable clause in their agreement.
• The protection against grievances relates to unjustified dismissal claims only and does not prevent grievance in respect of unjustified disadvantage, sexual or other harassment, duress or discrimination.

The expressed policy behind the change is to give employers who fit the criteria confidence to employ someone on trial, knowing that if they don’t work out, they will not be facing legal action.   So employees who may, at first glance, appear of dubious worth can nevertheless be given a chance to prove themselves when this is unlikely to have happened otherwise.  It also prevents employees (and there have been some…) from bringing unmeritorious grievances after lasting only a short time – in the hope that the employer will pay out just to make the case go away.

Time will tell as to whether this change in fact results in the desired benefits – but in the meantime employers should be aware of its existence and take the necessary step of reviewing their employment agreements to take advantage of the protection.