Trial Periods

Posted by on 1 November 2015
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Trial periods

90 days

All employers now have the ability to utilise a 90 day trial period with new employees and many employers are taking up that opportunity.

This is an area where the case law is still developing, however there are some key points and potential "fish hooks" that employers need to be aware of when using and relying on a 90 day trial period.

Trial periods are only available for employers to use with new employees and must be agreed in writing in an employment agreement signed by both parties before or immediately at the commencement of employment.

Key lessons from the developing case law:

1. The trial period must be agreed to in writing before the commencement of employment, not retrospectively or otherwise settled during its course.

2. The employer must treat employees fairly and in accordance with the employment agreement in all other respects during the trial period. In a recent case, the employment agreement required the employer to address performance concerns, which it did not do.

3. The new law only negates the normal requirement to give reasons for the dismissal in writing when subsequently and formally called upon to do so. The new law does not preclude an employer being obliged (when asked) to provide an explanation for the dismissal at the time of giving notice of termination during the trial period. The s4 good faith obligations appear to require employers to give an explanation for the dismissal at the time of giving notice, if asked by the employee.

4. Notice of termination must be given in accordance with the employment agreement. 

Checklist for how to correctly implement a 90 day trial period
Checklist:

  • Assess whether a trial period is necessary
  • Make sure the clause is a "trial period clause" and not for a "probationary period". There is a difference.
  • It can only be used for new employees (not previous or existing employees).
  • The trial period clause must be included in the written employment agreement and must contain certain information. 
  • The employment agreement must be signed before or immediately at commencement of employment.
  • You need to treat the employee fairly and in accordance with the employment agreement in all other respects during the trial period.
  • Give notice of dismissal before the trial period ends, in accordance with the employment agreement.
  • Employers should not dismiss by reason of any of the grounds which are prohibitted areas of discrimination, i.e. sex, martial status, religious belief, ethical belief, colour, race, disability (physical, intellectual, psychiatric or psycological), age, political opinion, employment status, family status and sexual orientation.

Come and talk to us before you include a "trial period" clause and when terminating employment during a trial period, so we can help you get it right.