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An update – trial periods and payments in lieu of notice

An interesting trial period case has been considered by the Court of Appeal recently with surprisingly positive results for employers!  Making payments in lieu of notice when terminating an employment agreement under the trial period has always been risky.  The law surrounding this practise has been unclear, and we have always advised against it.

However, in the case of Loan v Scott Technology NZ Ltd, the Employment Court examined the unique circumstances of this trial period dismissal and found that the payment made in lieu of notice satisfied the requirements of ‘giving notice’ for the purposes of section 67B(1) of the Employment Relations Act.  The Court of Appeal agreed.

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New ‘triangular’ personal grievance law passed

The Employment Relations (Triangular Employment) Amendment Act 2019 has been passed into legislation, making changes which may cause significant implications for the labour hire/temp industry as we know it.

From 27 June 2020, the new law will allow a labour hire worker (commonly referred to as a “temp”) to potentially add a host company to a personal grievance proceeding which the labour hire worker takes against their employer (the “labour hire agency” or “temp agency”). This is enabled by the newly introduced concept of a “controlling third party”, which has been defined in the Act as a person:

  • who has a contract or other arrangement with an employer under which an employee of the employer performs work for the benefit of the person, and
  • who exercises, or is entitled to exercise, control or direction over the employee that is similar or substantially similar to the control or direction that an employer exercises, or is entitled to exercise, in relation to the employee.

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90 day trial periods are tricky – see our checklist!

When employment is subject to a trial period and the employee is dismissed during the trial period, they are prevented from taking a personal grievance for unjustified dismissal.  However, employees can still take a personal grievance on other grounds, such as disadvantage, discrimination and more.  There’s also a high chance that the trial period may be invalidated, leaving employers in a very tricky situation.

Continue reading → 90 day trial periods are tricky – see our checklist!

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What is a constructive dismissal?

A constructive dismissal may occur when an employee has resigned, but the resignation has been forced or initiated by some unjustifiable action of the employer. This will typically occur under the following circumstances (we refer to Auckland Shop Employees Union v Woolworths (NZ) Ltd [1985] 2 NZLR 372):

  1. Where an employer gives an employee the choice of either resigning or being dismissed; or
  2. Where the employer has followed a course of conduct with the deliberate and dominant purpose of coercing an employee to resign; or
  3. Where the employer is in breach of a term or condition of employment to such an extent that the employee is justified in treating the employer’s conduct as terminating the employment.

Continue reading → What is a constructive dismissal?