Trials and Probations

The Small Business Company

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Trial periods are a good way of protecting your business in the event that an employee isn’t suitable for the job. While they can be considered a safety net for your business in case things don’t work out, that doesn’t mean you shouldn’t try to resolve any issues before deciding to dismiss an employee.

This article explains your legal obligations when using trial or probation periods and gives some practical suggestions for resolving issues with employees on trials and probations.

Trial periods

Trial periods of up to 90 days in length can be included in employment agreements. Some employers make the trial period shorter, but the legal maximum length can’t be longer than 90 days.

The most important legal consideration is being careful to ensure your employee is aware of the trial period and that it is clearly set out in their employment agreement. If you don’t record the trial period in writing, it means the trial period has no legal grounds if the employee decides to contest it.

Other rules include:

Any trial period (regardless of length) must be agreed on in writing by your employee as part of their employment agreement before starting work.

An employee can be dismissed during the trial period without being able to raise a personal grievance against you on the grounds of an unfair dismissal.

If an employee is dismissed during a trial period, he or she could still raise a personal grievance on the grounds of discrimination, harassment or by arguing that that they have been disadvantaged in some way.

Any provision in the employment agreement about the giving of notice must still be adhered to.

Trial periods are for new employees only – not existing employees taking on new roles or responsibilities.

After a trial ends, you can’t extend the trial or offer a new trial period.

The employee is still entitled to annual leave, holidays and other benefits entitled to permanent employees.

Case study:

Mark started his own plumbing business one year ago. He is now so busy with job requests that he needs to take on another qualified staff member. Mark advertises the position, finds a suitable candidate and includes a 90-day trial period clause in his new employee’s individual contract. After 30 days Mark finds that his new employee is arriving at work late and completing jobs to a poor standard.

The first thing Mark does is ask his employee for an explanation. This is important as the issue could be resolved by talking it through. For example, does the employee have the right tools to complete jobs? Could the employee’s skills need some development, or are they finding the learning process difficult?

After talking to the employee, Mark discovers that the employee isn’t enjoying the job and is considering returning to study to learn a new trade. After talking further to resolve the issue, it’s mutually decided that the employee will finish work after a short notice period.

Probation periods

A probation period is different from a trial period. This is an agreed period at the beginning of employment where the employee can demonstrate their skills and understands that they are being assessed. An important difference from a trial period is that an employee dismissed during (or at the end of) a probation period can still raise a personal grievance for unfair dismissal and you will need to show that there was a valid reason for their dismissal and the dismissal was carried out in a fair way.

The fact that there is a probation period must be recorded in your employment agreement and you can’t use a probation period as a way to get work done without paying for it.

Mediation

If there’s a problem during a trial or probation period, the employer and the employee can access mediation services offered by the Ministry of Business Innovation and Employment – Labour. Mediation services help both employers and employees obtain information about problem solving, identifying and resolving issues, and improving communication. This could involve a face-to-face meeting with an independent mediator, or even a simple email or phone call.

A mediator may contact you and the other party to discuss the problem and see if there is a way of resolving it without attending a mediation meeting. If it is agreed that a mediation meeting is the best way forward and a meeting date has been arranged, both parties will be advised in writing of the time and venue. Examples of possible venues include the workplace, local community venue, marae, or the nearest Ministry of Business Innovation and Employment – Labour office. It is important that it is a venue where both parties feel comfortable and confidentiality can be maintained.

If you do decide to seek mediation you can contact the Ministry of Business Innovation and Employment – Labour by calling the Contact Centre on 0800 20 90 20. An Information Officer will listen to your request and discuss an appropriate action. The Information Officer will refer the matter to an area office so mediation can be arranged.

Find out more about the  Mediation Services offered by the Ministry of Business Innovation and Employment – Labour.

Fixed-term agreements

Sometimes employers initially hire staff on fixed-term employment agreements as a way of releasing the employee at the end of the fixed term if the employer isn’t satisfied with the employee. This is specifically prohibited and should be avoided to prevent issues arising that could cost your business a great deal of time and money. To hire an employee on a fixed-term basis, you need to have a genuine reason for the job being fixed term (rather than a concern that the employee won’t perform in the job).

Some examples of legitimate fixed-term appointments:

  • Seasonal work
  • Work on a project or initiative
  • Filling in for an employee on leave.

Fixed-term job description example:

“The position of assistant tree pruner offered by PruneTec is for a fixed-term period that involves pruning trees on five properties. The job will cease when all the trees are pruned. The job is estimated to take three weeks.”

Find out more in our Focus on employees, or read the Guide to hiring for employers and What to put in employment agreements.

 
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