Case to test how to dismiss workers on 90-day period

Canon is appealing an Employment Relations Authority decision that says it dismissed a worker during a trial period incorrectly.

The case will test key employment law provisions, which say what employers must do when getting rid of someone under a 90-day trial.

The 90-day trial rule, introduced in 2011, was intended to provide employers greater flexibility.

However, lawyers are warning employers to act cautiously and in strict accordance with the legislation, at least until the Employment Court hears the dispute between Brent Hutchison and Canon.

After the 89th day of Mr Hutchison's trial period, Canon told him he was being terminated under the 90-day rule, and gave him a  week’s pay and holiday pay.

Mr Hutchison claimed he should have been given notice and was unjustifiably dismissed. He argued Canon had failed to comply with minimum statutory requirements in the Employment Relations Act.

Employment Relations Authority member Michele Ryan agreed with Mr Hutchison. (see the judgment attached)

“An employer’s ability to lawfully terminate employment during a trial period is dependent, among other things, on the employer giving notice to the employee before the end of the trial period,” she says in the decision.

She says notice mechanisms provided for in the trial period contract were “defective” as they did not comply with the legislation.

Ms Ryan said while Canon might find the approach “overly pedantic” and while the week’s pay may have put Mr Hutchison in a better position than if he was given notice that was speculative and didn't negate a finding that Canon failed to comply with the law.

Mr Hutchison’s lawyer, Geoff O’Sullivan, says the decision means employers must follow the strict provisions of the law carefully.

He says that while employers presume the 90-day period gives flexibility, there are still strict rules within the statute.

Hesketh Henry partner Jim Roberts, who is representing Canon, says employers must know not to give payment instead of notice when using the 90-day period. 

He says Canon will appeal the case on the basis that the authority relied on a throwaway comment in the Employment Court in the leading case Smith v Stokes Valley Pharmacy.

The employment law specialist says the issue is whether telling someone they are dismissed under the 90-day period is enough or more action is required.

“It’s a question of whether notice under the act means notification or something else like a period of notice.”

Mr Roberts says as it is “early days,” he is unsure of when the Employment Court case will be heard.

Earlier this year a new Ministry of Business, Innovation and Employment study found 59% of employers had taken on staff on a 90-day trial period.

The survey found about one-third of employers hired people they wouldn't otherwise have taken on because the 90-day trial reduced the risk and provided a "safety net."

vyoung@nbr.co.nz

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