KEEPING YOUR PROMISE: HAVE YOU MADE AN OFFER OF EMPLOYMENT THAT YOU CAN NOT KEEP?

An employment relationship commences with an offer and acceptance of employment.  This is a simple contract law premise, but there are a few legal tips that employers need to watch out for, especially in relation to trial periods and personal grievances.

It is important to remember that the definition of an employee under the Employment Relations Act 2000 (ERA) includes a person intending to work.  A person intending to work is subsequently defined as a person who has been offered, and accepted, work as an employee.

Offer and Acceptance

An offer of employment can take many forms.  For example, it could be an offer over the telephone or via an email, or the successful applicant could receive a letter of offer or a written employment agreement to review.  The key requirement is that it must be an offer which is capable of acceptance; that is, an offer where the person knows, or is aware of, the essential terms of employment such as hours or work, location, remuneration, the position and its duties.

The ERA requires an employer bargaining for an individual employment agreement to provide a copy of the intended agreement to the employee, advise the employee they can take independent advice, give them time to do so, and consider and respond to any issues raised by the employee.  The clear implication (although it is not specifically set out) is that the offer of employment must be in writing, in the form of an agreement.  The failure of an employer to do this does not invalidate the employment offer or agreement.  All it does is establish that the employer has breached the ERA in respect of the bargaining process.  This renders the employer liable to a penalty.

All terms of employment do not have to be settled for a contract of employment to have formed but the successful applicant does have to confirm acceptance of the offer.  Acceptance can also take many forms, such as a ‘yes I would love the job’ on the telephone or by reply email, or the returning of a signed employment agreement.

Note that if the employer’s offer requests that acceptance needs to be in writing, then it needs to be in writing for acceptance to be effective.  It is also important to note that an offer can expire or be revoked if not accepted prior.  However, once accepted, the offer can no longer be cancelled or revoked and the successful applicant magically turns into an employee!

Personal Grievances

As a person intending to work is an employee under the ERA, they are entitled to access the statutory personal grievance procedure from the date they accept the offer of employment.

It is important to remember that even if the employee has not commenced work in the business yet (in fact, they may still be working for another employer), they must be treated as an employee for all intents and purposes.  For example, an employer cannot decide that they no longer require the successful applicant and advise them that they are no longer needed. This would almost certainly amount to an unjustified dismissal.

Trial Periods

Employers can employ employees, whom they have not previously employed, on a trial period for up to 90 days from the commencement of employment.  The employee on a valid and enforceable trial period is then barred from bringing a personal grievance in respect of any dismissal during the trial period.

Employment commences when it is offered and accepted.  If the offer of employment does not contain a written trial period then the employee cannot subsequently be placed on one.

The reasoning for this proposition is that an employee employed previously includes an existing or current employee of the employer, even if they have been an employee for only a short while, and even though the employee may not have yet commenced work.  If employment has commenced prior to the written trial period being agreed then the person is already an employee and cannot then be placed on a trial period.  For example, if there is an offer and acceptance of employment on the telephone or via email and only after does the employer give the employee a draft employment agreement to review, with a compliant trial period in it, the trial period will be null and void because the person is already an employee.

Employers need to be vigilant that they (or any recruiter acting on their behalf) do not make an offer of employment capable of acceptance over the telephone as there is then no possibility of a trial period.

Best practice

In a nutshell, do not make an offer of employment that you cannot keep.

If you wish to place a new employee on a trial period it is best practice that the offer of employment includes a written employment agreement containing a compliant trial period, and the agreement should be agreed and signed before the employee commences work.