More Fishhooks in the 90 Day Trial Period
The requirement for precision in Employment Agreements
In 2009 the Employment Relations Act 2000 was amended to allow a trial period of 90 days or less. This allowed an employer to dismiss an employee within the 90 day period and prevented the employee from bringing a personal grievance in respect of the dismissal. Initially, the ability to have a trial period was limited to employers who employed less than 20 employees. The restriction on the number of employees was removed in 2011.
It soon became clear that rigid adherence to the wording of the legislation was required in the Employment Agreement in order for an employer to be able to rely on the 90 day trial period clause. Loosely worded clauses that did not mirror the strict requirements of the legislation ran the risk of being unenforceable. In addition to the need to ensure that the wording in the Employment Agreement complies strictly with the requirements of the legislation, a new “fishhook” has been identified. This follows a recent decision of the Employment Relations Authority.
Ms B was employed as an early childhood teacher by a childcare facility (“the employer”). Ms B’s Employment Agreement contained a trial period clause which, on the face of it, appeared to comply with the legislation. The trial period clause allowed the employer to terminate Ms B’s employment on one week’s notice. Elsewhere in the Agreement, there was a clause recording the commencement date of employment.
The employer argued that the trial period clause in their Agreement met the requirements of the legislation for the following reasons:
- The trial period provisions complied with the legislation; and
- The commencement date of employment was set in a schedule to the Employment Agreement and therefore it was clear that the parties intended for the trial period to begin at the commencement of Ms B’s employment.
The Employment Relations Authority had to decide whether the trial period provisions met the requirements of the legislation. The Employment Relations Authority decided that the clause did not. The Authority held that the trial period clause “does not make any reference to the date on which the 90 day trial period commences”. Importantly, the trial period clause did not cross-reference to the commencement date that was recorded elsewhere in the Employment Agreement. It was therefore held that the trial period clause did not expressly state the start date of the trial period although the commencement date was mentioned elsewhere in the Agreement. The Authority held that it was not sufficient to imply that the 90 days started on the first day that Ms B turned up for work. In deciding this, the Authority held that there could be a number of circumstances in which a 90 day trial period may start on other than the commencement date such as if the employee was undergoing a lengthy induction, overseas temporary placement or undertaking offsite training or secondment.
The Authority member held “I consider that the prescriptive nature of Section 67A of the Act means that an obligation is on an employer to ensure that it has clearly and specifically met all of the requirements of Section 67A of the Act before it is permitted to rely on the validity of the trial period provision”. Following this decision, Ms B was able to proceed with her personal grievance for an unjustified dismissal.
The above case serves a warning that careful wording of the trial period clause in any Employment Agreement is of the utmost importance. If you are an employer and require assistance in drafting clauses for your Employment Agreements OR if you are an intended employee and require advice regarding a draft Employment Agreement, please do not hesitate to contact one of our employment team.