March 2010

Employment Trial Periods

Carefully following the strict requirements

It has always been possible (pursuant to Section 67 of the Employment Relations Act 2000 [“the Act”] ) to have a trial period for new employees. To have a trial period the following requirements must be met:

(a) The employee and employer must agree on the trial period; and

(b) The trial period must be specified in writing in the Employment Agreement; and

(c) If the employee was dismissed during the trial period the employee could bring a personal grievance for unjustified dismissal.

That provision of the Act remains. However, as from 1 March 2009 new rules apply for employers who employ less than 20 employees. These smaller employers may now enter into trial periods with their new employees and, should the employer dismiss the employee before the end of the trial period, then the employee cannot bring a personal grievance for an unjustified dismissal. Clearly, this is of significant advantage for smaller employers but likewise may be of considerable disadvantage to employees who choose to seek employment with a smaller employer. 
Many employers have found it frustrating to attempt to dismiss a new employee for unsatisfactory job performance during a trial period as the rules of procedural fairness require the employer to hold a number of performance review meetings with the employee before dismissal can be considered. Under the new amendments to the Act the employer who employs fewer than 20 employees need not go through that lengthy process during the trial period and instead, is entitled to simply dismiss the unsatisfactory employee.

In order to take advantage of the new changes the following must be complied with:

(a) The employer must employ fewer than 20 employees as at the beginning of the day on which the Employment Agreement is entered into; and

(b) The trial period must not exceed 90 days (in other words the employer and employee can agree on a lesser period); and

(c) The inclusion of the trial period in the Employment Agreement must be agreed between the employee and employer; and

(d) The trial period must be recorded in writing in an Employment Agreement; and

(e) The employer may only take advantage of this provision if the employee has not previously been employed by the employer.

However, a cautionary note must be raised. Even though the employee cannot bring a grievance for unjustified dismissal if they are dismissed from their employment within the trial period, the other grievances under the Act remain. Therefore, an employee, if the grounds arise, may still bring a personal grievance for discrimination, harassment or an unjustified disadvantage/action.

For further information on this provision, including advice on drafting an Employment Agreement to include the trial provision please do not hesitate to contact one of our Employment Law team.