Decision offers insights for employment agreement compliance
The Employment Relations Authority (ERA) recently dealt with a case involving a 90-day trial period dispute between a beauty salon and a senior beauty therapist, where visa requirements and employment timing played crucial roles in the eventual outcome.
The dispute centred on whether a trial period provision was valid when the specified start date differed from the actual employment commencement date, ultimately resulting in an unjustified dismissal finding and significant compensation for the worker.
The worker interviewed for a senior beauty therapist position in September 2022, with both parties acknowledging the need for a valid work visa before employment could begin.
Two employment agreements were signed - one in October 2022 and another in December 2022. Due to visa processing delays, the worker obtained her visa on December 23, 2022, and began work on January 4, 2023.
The employment agreement contained a trial period clause stating:
"You are employed under a 90-day trial period commencing on the date identified at item 4 of the Schedule... During the trial period, your employment may be terminated with two weeks notice by either party, or payment in lieu of such notice."
On March 17, 2023, the worker received a termination letter referencing previous discussions.
The employer claimed they had met on January 29 to discuss the 12-week trial period. The letter cited business challenges from a recent cyclone affecting Hawke's Bay as the reason for termination.
The ERA examined Section 67A of the Employment Relations Act 2000, which defines a trial provision as requiring:
The employer argued the trial period should be considered as starting from the actual work commencement date of January 4, 2023, despite the written date of December 15, 2022. The worker contended that based on the written date, the trial period had expired by the time of dismissal.
The ERA found two fatal flaws in the trial period arrangement:
"Section 67A(2)(a) is accordingly breached by the provision in [the worker's] employment agreement. This is because the employment agreement does not provide for a specified period (not exceeding 90 days), starting at the beginning of the employee's employment."
This ruling highlighted that trial periods must align precisely with actual employment commencement.
The termination significantly affected the worker's circumstances, leading to her departure from New Zealand on July 7, 2023. The ERA noted:
"There is no doubt the dismissal had a great effect on [the worker]. She spoke about the financial difficulty she faced and the concern being in a foreign country with her income stream ending and no ongoing employment."
"Whilst I do not accept the submission that [the employer's] actions were particularly egregious, compensation under this heading is to compensate the employee, not to punish the employer."
Despite the employer's evidence of financial difficulties, the ERA maintained that compensation should focus on the worker's experience rather than the employer's circumstances, awarding $29,700 in total remedies.
