We are still getting 90 Day Dismissals wrong,
so what will the future bring
Despite the fact that 90 Day Trial Periods have been part of the employment landscape in New Zealand since March 2009, many Employers have still not learnt that getting the process wrong, can result in expensive consequences.
Nazareth Care Charitable Trust Board (“Nazareth”) employed a staff member, Mr Roach, on an agreement that included a 90 Day Trial Period. Approximately six (6) weeks after the commencement of the employment relationship, Mr Roach was requested to attend a meeting where he was told that his employment was being terminated under the 90 Day Trial Period Provisions. Despite requesting to know the reasons for the decision, Mr Roach was not advised of such reasons, with him being told he would be paid one (1) week in lieu of notice.
As Nazareth did not follow any of the procedural requirements of the Employment Relations Act to justify the dismissal, the Employment Court held that the dismissal was unjustified. The Court then considered that the circumstances justified extending the remedies claim beyond the usual three-month period for lost wages and awarded Mr Roach 12 months remuneration ($112,000.00 + interest) and $25,000.00 for hurt, humiliation and injury to feelings.
This case demonstrates that severe consequences can be incurred where Employers fail to correctly apply the s67A 90 Day Trial Period Provisions. However, the time is shortly coming when the risks and liabilities will step up a further level given the upcoming law changes.
2019 will likely see significant restrictions on which Employers can continue to use the 90 Day Trial Period Provisions. Those companies falling outside of the Employee cap threshold (likely to be set at between 19 – 50 staff) will have to resort to a s67 Probationary Period for the first period of a new Employee’s employment.
The requirements around the use of probationary periods will be more rigorous than the current 90 Day Provisions. Clear KPI’s will have to be set from the outset, including a monitoring process being established and Employees being provided with feedback on a previously agreed meeting schedule basis. Employers will be entitled to move through the warning process far more rapidly than within a performance management process, however any decisions made (providing of warnings or the dismissal decision) will be subject to the Employee’s rights to raise a personal grievance for unjustified disadvantage and/or unjustified dismissal.
As with the 90 Day Trial, which requires a well-documented process for monitoring and reporting, any Employer electing to use a s67 Probationary Process will need to ensure their methodology and practice is solid. Current Employment Relations Authority Statistics confirm that it is more difficult for an Employer to win a case concerning a dismissal following a performance management process and, with the outcomes we are now seeing with the use of incorrect 90 Day Trial Processes, we believe that Probationary Periods will also inherently be more difficult, so expect to see such terminations featuring often in future employment case outcomes.
However, neither the 90 Day Trial or Probationary Periods need to be difficult with both relying solely on the implementation of a solid process. If you need any assistance in reviewing or developing your trial or probationary processes, please feel free to give us a call on (07) 838 0018.