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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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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.

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Careful considerations for employment agreements

Whether you’re hiring someone new or an employee considering a new job offer, there are a few key clauses of the employment agreement that need careful thought and consideration.  Obviously, the rate of pay will be very important but there’s more to it than that.  We recommend you pay particular attention to the following key provisions: Hours of Work, Restraint of Trade and Trial periods.

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