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Frequent readers of our articles will know that trial periods can be difficult; every little detail needs to be correct, or the trial period will be invalid. A recent Employment Relations Authority (Authority) determination has given us some more details that employers need to watch out for.
The recent determination in Singh v Pilling & Leggett Engineering Co Limited[1] concerned an alleged unjustified dismissal. The employer sought to rely on a trial period in the employee’s employment agreement to prevent the employee pursuing the personal grievance. The employee’s advocate identified a number of issues in relation to the validity of the trial period. The Authority found that three of those matters prevented the trial period from being valid. The three issues on which the trial period failed were:
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- The employee had not been advised of his right to take independent advice about the trial period before he signed his employment agreement;
- The words of the trial period did not comply with the requirements of the Employment Relations Act 2000 (the Act); and
- Notice of termination was not given in accordance with the employment agreement, at the time of the dismissal.
Independent advice
There was some dispute about the circumstances of the employee being given the written employment agreement, what he was told when he was given the document, and when he signed and returned it. On the evidence, the Authority found that Mr Singh had been given the agreement, invited to take it away, and told that he could talk to his wife about it. The Authority found that the most likely sequence of events was that Mr Singh took the agreement home, signed it that evening, texted the employer to advise them that he would accept the job, and returned the signed agreement when he turned up for his first shift.
The Authority considered section 63A(2)(b) of the Act, which provides that an employer must advise an employee that they are entitled to seek independent advice about the intended agreement. It found that the employer had, on his own evidence, told the employee that he could take the agreement home and talk to his wife about it. This was not the same as advising the employee that he could seek independent advice.
The Authority followed an Employment Court decision,[2] which held that a declaration at the end of the employment agreement to the effect that the employee confirmed that they had been advised of the right to obtain independent advice, without any accompanying specific advice beforehand, was not sufficient to meet the Act’s requirements.
The failure to advise Mr Singh of his right to seek independent (not his wife’s) advice rendered the trial period invalid.
The words of the trial period
The trial period in Mr Singh’s employment agreement purported to explain the effect and limitations of the trial period. The last line said “This trial period does not limit the legal rights and obligations of the employer or the employee (including access to mediation services), except as specified in section s67A(5) of the Employment Relations Act 2000”.
Unfortunately, there is no section 67A(5) in the Act. It was not clear whether this was a typo, a reference to a previously repealed provision, or a mistaken reference to a different section. In any event, the Authority found that the impact of the reference to this non-existent clause meant that the clause was unclear in terms of what rights it was purporting to exclude. Given the restriction of rights that an enforceable trial period brings (i.e. the inability to raise a personal grievance for unjustified dismissal), the Authority found that the requirements of the Act must be strictly met. The clause in Mr Singh’s employment agreement did not meet the strict requirements of the Act, and therefore was invalid.
Notice of dismissal
Mr Singh’s trial period stated that “Any notice, as specified in the employment agreement, must be given within the trial period, even if the actual dismissal does not become effective until after the trial period ends”. The termination provision in the employment agreement stated that termination could be effected “by providing two weeks’ notice in writing to the Employee”. While the parties disputed the circumstances of the dismissal, the Authority reached the view that Mr Singh had been advised verbally of his dismissal, in a meeting on 29 August 2023. Written notice was not provided until the next day, when Mr Singh was given a letter of termination which said that it took effect from 30 August 2023, and gave him two weeks’ pay. The Authority found that the notice needed to be in writing, and needed to be at the time of dismissal (not the day after).
As the trial period was invalid on three counts, the Authority found that Mr Singh was not barred from pursuing a personal grievance for his dismissal. He was found to have been unjustifiably dismissed due to the employer’s reliance on the unlawful trial period, which resulted in lack of process and procedural fairness in his dismissal. Mr Singh was awarded lost wages ($1,760) and compensation for humiliation, loss of dignity and injury to feelings ($15,000).
Lessons learned
This is yet another case which confirms that when it comes to trial periods, every i must be dotted, and every t crossed.
- When offering an employment agreement or a variation to an employment agreement, it is always important to ensure the employee is actually advised to take independent advice – as well as confirming in the agreement that this has been the case. For a trial period, which seeks to limit an employee’s rights, this is crucial to its validity and enforceability.
- The drafting of a trial period must also be right on point. Clumsy drafting, mistaken references, or an unclear provision may well mean that the trial period is invalid.
- When terminating employment in reliance on a trial period, again, the requirements of the clause must be followed in detail. The correct period of notice must be given, in the manner specified in the employment agreement.
We cannot say it often enough; trial periods are construed strictly. In addition to independent advice and tight drafting, it is vital to make sure that the agreement containing the trial period is signed before the employee commences work, and that when terminating under a trial period, you provide the correct period of notice, in the correct way.
If you need your trial period double – (or triple!) checked, or you are thinking of relying on a trial period to bring an employee’s employment to an end, please reach out to the Employment Law Team or your usual contact at Hesketh Henry for advice.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
[1] [2025] NZERA 389
[2] Senate Investment Trust Through Crown Lease Trustees Limited v Cooper [2021] NZEmpC 45.
