“A gem cannot be polished without friction, nor a man [person] perfected without trials.”
The famous philosopher Lucius Annaeus Seneca could not have predicted section 67A of the Employment Relations Act 2000 when he wrote the above particular piece of wisdom. But the current Government would appear to share his view, in amending the Act late last year to provide that, once again, employers of any size can utilise trial provisions when employing new employees.
The legislation allows for employment agreements to contain a provision that the employee is to serve a trial for up to the first 90 days of employment, and if dismissed during the trial, the employee cannot raise a personal grievance for unjustified dismissal. It is seen to encourage employers to take a chance on a new hire, with the failsafe “get out of jail free” card, if the employment does not work out.
Of course, in real life it’s never that straightforward. The trial provision law takes away a fundamental right of an employee to make a claim for unjustified dismissal if treated poorly, and the Employment Relations Authority and Employment Court have taken the view that with great power comes great responsibility. And so an employer must have the trial provision in place 100% correctly, and comply with it perfectly, if they are to be allowed to exercise this right. The casebooks (or these days, online databases) are littered with decisions where employers did not get the application of this law right, and suffered the consequences, with employees being able to raise successful claims for unjustified dismissal.
So how do you get it right? Below is a list of dos and don’ts. But beware! This is an ever-changing area of employment law, and I will not be held responsible if you dismiss someone under a trial period and get it wrong, and you didn’t take advice tailored to your situation first. You have been warned.
Some of the issues you need to be 100% sure you are watertight on:
Accredited employers may not use 90-day trial periods when hiring an employee on an Accredited Employer Work Visa (AEWV). There is no way around this.
If you are legally able to use a trial period, it must be agreed with your employee in their employment agreement, in writing.
The wording of your trial provision must be in compliance with the legislation. It must include that:
for a specified period (not exceeding 90 days), starting at the beginning of the employee’s employment, the employee is to serve a trial period; and
during that period, the employer may dismiss the employee; and
if the employer does so, the employee is not entitled to bring a personal grievance or other legal proceedings in respect of the dismissal.
The trial period needs to include a notice period. It is a very good idea that this is a shorter period than your general notice period, and also that you state that you can pay wages or salary in lieu of notice during the notice period.
The employee cannot have worked for you before, for any period of time. Even five minutes is too long. So if you ask the employee to sign up to a trial period on their first day of work, you are too late, and it cannot be used to dismiss them.
You must therefore get agreement to the trial period before the first day of work.
You can cause yourself a problem if during the recruitment process you have verbally offered employment, and it has been accepted, before the agreement is signed. This can mean that you are prevented from including a trial period in the employment agreement. Or if you have included it, probably cannot be used to dismiss them.
This means that it is a very good idea to mention in the job interview that any offer you make will be subject to a trial period. Tell them that the process is that if you decide to offer them the job, you will send them a written offer and proposed employment agreement. That proposed agreement can then contain a correctly worded trial provision.
The employee must then be given a reasonable time to consider the offer and seek independent advice as to its terms (and ask questions/negotiate the terms). That could be as much as a week. It could be longer if for some reason they can’t access advice sooner. It will not be acceptable to give the person the proposed agreement one day, and expect them to sign and return it that same day…or even the day after. Give a reasonable time here.
The agreement containing the trial period must be signed and returned to you before their first day of work for the trial period to be binding.
Even if you have a valid trial provision in place, that does not prevent the employee from raising other claims against you - such as for discrimination, or sexual harassment. You still have to meet your legal obligations to your employees.
To terminate in reliance on a trial period, you should review it carefully and check that you have met all the requirements. This includes carefully counting the 90 day period. It is not three months. If in doubt (or even if not!) take advice.
Then, prepare a letter for the employee explaining what is happening, and giving notice. Meet with them, before the 90-day period has expired, to explain your decision, and give them the letter. You don’t have to follow regular dismissal processes, but you should still act in good faith, and treat the employee with care and respect.
So are trial periods worth it? Well, if you have a valid one in place, and terminate correctly pursuant to the trial period, it can act to prevent the employee taking an unjustified dismissal claim against you. If you have ever faced one of those, you will know that it is worth a reasonable amount of effort to not have to go through that. But they are not an easy “out”. And now that they are available again to all employers, we can expect new case law, which could change the landscape further. Watch this space.