Trial Periods: Building company pay $27k to procedural failures

Published 11 December 2024 | 2 min read

Trial periods are an invaluable tool for managing workforce flexibility. However, they can also present pitfalls if not executed with precision. Misaligned expectations regarding job duties, unclear employment agreements, and procedural missteps can quickly escalate into disputes.

One recent Employment Relations Authority (ERA) case highlights the risks involved when trial periods and job roles are not clearly defined or properly documented.

Communication error leads to compensation

In early 2023, a worker with 15 years of roofing experience accepted a role with a building company, believing he would perform diverse construction tasks and eventually secure an apprenticeship. However, confusion quickly arose.

The employment agreement inconsistently described his role as both "carpenter/labourer" and "labourer," creating uncertainty about his duties. Further complicating matters, the worker claimed tasks assigned were misaligned with initial discussions.

After a disagreement about cladding work in May 2023, the employer dismissed the worker under a 90-day trial period. However, the ERA ruled the dismissal unjustified due to procedural failures, including the employer's inability to prove that the employment agreement had been signed before work commenced.

The result? A costly payout of $13,500 in compensation and $13,572 in lost wages, albeit reduced by 10% for contributory conduct.

Where did it go wrong?

This case exposed several critical conflicts under New Zealand employment law:

1. Unclear role descriptions: The vague description of job duties led to disputes about what was reasonably expected.
2. Trial period missteps: The trial period was deemed invalid because the employer could not prove the agreement was signed before work began.
3. Dismissal process issues: The dismissal lacked procedural rigour, breaching good faith expectations.

The ERA’s decision serves as a cautionary tale for New Zealand employers, illustrating the importance of transparency and procedural compliance in employment relationships.

ERA’s ruling

The ERA’s decision highlights essential takeaways for businesses:

• An employment agreement must be signed before an employee starts work for the trial period to be valid.
• Job descriptions should be specific, ensuring mutual understanding of the role.
• Employers must act in good faith and follow proper procedures when ending employment, even under trial periods.
• Miscommunication or vague promises (e.g., about future opportunities like apprenticeships) can undermine workplace relationships and invite legal challenges.

Roadmap for employment success

The lesson is clear: prevention is better than cure. Employment agreements must be watertight, with clear, agreed-upon terms about job roles, duties, and trial periods. Regular communication and documentation can help resolve misunderstandings early. By fostering good faith relationships and ensuring procedural compliance, businesses can not only avoid legal pitfalls but also build stronger, more productive teams.

Being proactive in these areas isn't just about risk mitigation—it’s about fostering a workplace culture where employees and employers can thrive together.

Note: This information is based on official details from Employment New Zealand and is subject to change. Always refer to the latest guidelines for the most accurate information. Visit Employment New Zealand here.