At present, only businesses with fewer than 20 employees are able to use these.
A trial provision must be included in writing in the employment agreement and must be for a specified period not exceeding 90 days, starting at the beginning of the employee’s employment.
The employee cannot have been previously employed by the employer.
There is no restriction on the inclusion of a trial provision in a collective employment agreement but the reality is they are hardly ever accepted by unions, who historically have termed them ‘fire at will’ clauses.
While both opponents and advocates for 90-day trial provisions cite different statistics, there is no compelling evidence that they have been used cynically by more than a handful of employers.
In my experience, most employers use them for a genuine purpose — to assess an employee’s fit for the business and only dismiss the employee when it is clear ongoing permanent employment is not going to work out.
While there is no obligation on an employer to include such a provision, there is also no obligation on an employee to accept one.
In a market where there is low unemployment, strong candidates will be able to negotiate offers of employment without such trial provisions.
Employers are required to provide the employee with a copy of the intended agreement, advise them that they are entitled to seek independent advice, give them a reasonable opportunity to seek that advice and consider any issues that are raised and respond to them. These obligations apply to all individual employment agreements offered, whether or not they contain a trial provision.
Because the provisions prevent an employee from bringing a dismissal personal grievance, the Employment Relations Authority and Employment Court have interpreted them restrictively.
The right to bring disadvantage, discrimination, sexual harassment, racial harassment and other grievances is preserved.
An employee whose employment agreement contains a trial provision is, in all other respects, to be treated no differently from an employee whose employment agreement does not contain a trial provision.
An employer is not required to go through the usual dismissal process or to comply with a statement in writing with the reasons for the dismissal.
However, the Employment Court has found the employer’s good faith obligations require them to give an explanation for the dismissal if asked at the time of giving notice.
Not only must the employer neither mislead nor deceive, or act in a manner that is likely to mislead or deceive, but there is a requirement for parties to an employment relationship to be active and constructive and responsive and communicative.
"The Trial Provision Scheme is not to allow employers to dismiss arbitrarily or capriciously. It is intended to remove the right to challenge a dismissal for reasons including lack of progress in training, lack of performance, incompatibility with the job or with others, and such other criteria."
While an employer is not obliged to notify an employee of the proposal to dismiss, or to offer them an opportunity to comment, an employee seeking an explanation for the dismissal is entitled to one which must not be misleading or deceptive.
The Court of Appeal has commented that termination during trial periods must be on notice.
However, trial period clauses that allow employers to pay the employee in lieu of work for the notice period are permissible where the correct period of notice has been conveyed in clear and unambiguous terms.
In 2011, the Employment Court set out what was required to ensure that trial periods were mutually agreed in writing before a prospective employee became an employee.
The employer must provide a copy of the employment agreement with the trial provision at the same time as making an offer of employment.
The employee must be given a reasonable opportunity to seek advice about the terms of the offer.
It will only be when that opportunity has been taken or has otherwise passed, any variations to the proposed agreement have been settled and the agreement has been accepted (usually by signing) that there will be a lawful trial period effective from the specified date of commencement of the agreement.
Because the trial provision can only start at the beginning of the employee’s employment, employers need to be very careful not to invalidate the clause by trials or inductions.
The Employment Relations Authority has found that where a person was asked to work a trial, induction or observation before signing an employment agreement, including a trial provision, they had in fact been previously employed. This made the clause invalid.
The consequence for this was that the dismissal was open to challenge and was found to be unjustified.
The Employment Relations Authority has also found that an employer could not reasonably infer that a 90-day trial period began on the first day of work if an employment agreement did not contain a specific commencement date for the trial period.
There are a number of circumstances in which an employee and an employer may agree that the 90-day trial period does not start on the commencement date of employment but when the employee actually starts work.
An example of this is when an employee is undertaking off-site training.
The prescriptive nature of the legislation means that the obligation is on an employer to ensure it has clearly and specifically met all of the requirements of the Act, including the date on which the trial period starts.
Such a failing prevents the employer from relying on the trial provision and any dismissal.
Any planned expansion for the operation of trial provisions is unlikely to alter the Court’s historically restrictive approach.
Trial clauses need to be well-considered, well-drafted and well-implemented to have legal effect.
- The opinions expressed in this article are those of the writer and do not purport to be specific legal or professional advice. John Farrow is a partner with Anderson Lloyd, specialising in employment law.
