Lesson for employers - 90 days, no exceptions

12 May 2017

by Katherine McDonald, solicitor

The 90 day trial period has been available to all employers since April 2011 and we are repeatedly seeing errors by employers in applying it correctly.

Put simply, if an employee is properly dismissed using a 90 day trial provision they cannot take a personal grievance for unjustified dismissal.

Though it sounds reasonably straight forward if any part of the trial period dismissal is incorrect, even if only minor, the employee may be able to bring a personal grievance against the employer.

Given the 90 day trial clause has 90 days in its title, you would assume that an employer would understand you cannot extend this trial period to get further protection. It’s a 90 day rule not a 120 day, nor a 150 day rule and so on.

Unfortunately a case just recently heard by the Employment Relations Authority (ERA) shows another frustrating example of an employer not adhering to the correct use of the 90 day clause.

What happened

A business owner in Manawatu thought they could extend the 90 day trial period for an employee who was a truck driver.

Mr D started working with the company as a truck driver in November 2015 and was given notice of his dismissal in February 2016.

While he was loading steel he dented a truck. He reported what had happened post incident. He later received a text message from his boss saying “Mate don’t think it’s working out too well… you haven’t got the experience we need”.

Mr D protested pointing out he’d only had one accident and offered to pay the costs. But his boss said via further texts he needed more experience which meant he couldn’t drive bigger trucks. The employer acknowledged he was a good guy but needed someone to drive the big Volvos.

Despite this communication Mr D continued to work for the company, making it past the 90 day point, and nothing further was said about the matter. He understood he was to have a guaranteed full time job, with a pay increase if he made it through the 90 day trial.

Having passed the 90 day trial period with no discussions with his employer Mr D asked about a pay rise, was told no and called into a meeting a few days later with his boss.

His boss said he did not meet the company’s requirements and gave him two weeks’ notice of his dismissal, 105 days after he started his employment.

Mr D said this decision came out of the blue because he had heard nothing, and therefore assumed his employment was going to continue.

The dismissal was confirmed with a letter for Mr D which said the standard 90 day trial period ended on February 3 2016. The letter then referred to the incident in December after he dented the truck and was told he was not suited to the company as his level of operating larger trucks was not satisfactory.

The letter also referred to a clause in the employment contract Mr D had signed which said his 3 month trial could be extended for a further calendar month to facilitate further learning and development. The letter also stated that he was now approaching the end of his fourth month on trial and his level of experience was still not up to satisfactory level, so no further employment was being offered.

Via the letter and an email sent discussing the one month extension of the 90 day period, the employer relied on the existence of a 90 trial period to justify its action in dismissing Mr D, however the notice was given 105 days after Mr D’s commencement of employment which is beyond the 90 day period as specified in legislation.

Finding

The 90 day trial period is to be interpreted strictly. Notice 105 days after the employee began working isn’t going to cut it.

Also, there is no ability under the Employment Relations Act to extend a 90 day trial, so even if the employer has added this extension to the employment contract and the employee has agreed, the clause is invalid and cannot be enforced.

Mr D received a payout of $8000 including compensation for his humiliation, loss of dignity and injury to feelings.

Key learnings

The 90 day clause cannot be used to give notice of dismissal after the 90 day period expires regardless of whether a clause has been added into the contract.

The moral of the story is if employers are unsure of how to invoke the 90 day clause for dismissal and try to wing it (and/or they are contemplating adding their own clauses to their employment contract) they should seek legal advice prior to doing so to reduce risk and ensure their actions will not result in personal grievances.

It’s a straightforward piece of law that employers need to get right, especially if they want to avoid paying large amounts of money to employees who raise personal grievances.