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When a trial period is correctly used, an employer may dismiss an employee during or at the end of that trial period without the risk of an unjustified dismissal claim. Trial periods must meet strict requirements under section 67A of the Employment Relations Act 2000(Act).
The recent Employment Relations Authority (ERA) determination of Fagotti v ACME & Co Limited1 demonstrates that some employers are still falling foul of the Act’s strict requirements, particularly the condition that an employee cannot have been previously employed by an employer (they must be truly ‘new’ employees).
ACME owns the popular Wellington café, Prefab. On 9 February, Mr Fagotti completed a paid eight-hour work trial for Prefab and was verbally offered a job after completing his shift. On 23 February, he started working at Prefab. The ERA accepted that he was handed an employment agreement shortly after arriving at Prefab on the morning of 23 February and that he signed it in front of Ms Dunn, a director of ACME.
On 12 March, Mr Fagotti was handed a letter by his manager. He was told it was “not good news” and that his employment had been terminated. No reasons were given. Mr Fagotti subsequently raised unjustified dismissal, unjustified disadvantage personal grievances and an unfair bargaining claim. ACME sought to rely on the trial period as a bar to the unjustified dismissal claim.
The ERA found that the eight-hour trial Mr Fagotti had worked meant that he had been previously employed by Prefab when he was offered his employment agreement containing a trial period on 23 February. This meant the trial period could not be relied on as a bar to the unjustified dismissal claim by ACME. The ERA Member reached this conclusion after deciding that on 9 February Mr Fagotti had “performed duties at Prefab that provided an economic benefit to ACME for which he expected, and received, remuneration.”
The ERA was also scathing of the fact that Mr Fagotti was not provided with a copy of his employment agreement in advance of commencing work, and that he was not informed of his right to seek advice about the agreement or provided with a reasonable opportunity to do so.
Mr Fagotti was successful in his unjustified dismissal and unfair bargaining claims, and was awarded a total of $8,598 in lost wages and compensation.
The Employment Relations Act 2000 requires a trial period clause to state the following:
Reproduced with the kind permission of DLA Phillips Fox