A recent Employment Court decision has highlighted the potential traps in using a work trial.

Amberleigh Howe-Thornley applied for a job at a shop called The Salad Bowl.  She was interviewed, then invited to do a three-hour work trial.  When cashing up at the end of the day, the shop owner discovered $50 was missing from the till and assumed that Ms Howe-Thornley had taken it. Ms Howe-Thornley was then told there was no job for her.

Ms Howe-Thornley raised a personal grievance claiming she had been unjustifiably dismissed from her employment with The Salad Bowl.

Was she an employee?

The Employment Court considered whether the work trial constituted employment. It concluded that Ms Howe-Thornley was an employee.  It took into account:

•    the fact that Ms Howe-Thornley was required to dress and present herself to customers as a member of staff;

•    the fact that the tasks Ms Howe-Thornley performed - preparing salads, serving customers - were the same as she would have carried out had she been employed.  Therefore The Salad Bowl gained an economic benefit from her work;

•    that Ms Howe-Thornley was "rewarded" for her work by being given a salad; and

•    that the parties expected Ms Howe-Thornley would be paid (even though she wasn't due to the alleged theft).

The Court then considered what contractual arrangements might apply. 

Trial Periods

An employer who wants to be able to dismiss an employee without the risk of a personal grievance can use a trial period.  Although generally known as "90-day trial periods", they can be for a much shorter time-frame.

However, employers must comply with strict statutory conditions.  In particular, the employee must be given a copy of the intended employment agreement, including the trial period provision, a reasonable time before commencing work in order to have the opportunity to seek advice before signing.  The employee must also sign the agreement before starting work.

As Ms Howe-Thornley had no written employment agreement, The Salad Bowl could not rely on a trial period to dismiss her.

Probationary Periods

An employer can include a probationary period clause in an employment agreement.  A probationary period may only be for as long as necessary in the circumstances.  Unlike a trial period, an employee dismissed while on probation may still bring a claim for unfair dismissal, and the employer's justification for termination and the process followed will still be scrutinised. 

Again, as Ms Howe-Thornley had no written employment agreement, there was no applicable probationary period clause.

Fixed Term Agreements

Finally, parties may agree that their employment relationship will be for a fixed term, which ends on a particular date, or when a particular identified event occurs. When a fixed term employment agreement ends, as agreed, it does not constitute a dismissal, and the employee does not have the right to raise a personal grievance.

However, the Employment Relations Act limits the use of fixed term agreements.  In particular, a fixed term agreement may not be used "to establish the suitability of the employee for permanent employment".

The Court concluded that Ms Howe-Thornley was employed on a fixed term agreement, which was to end when The Salad Bowl informed her of its decision as to whether she would be made a permanent employee.

However, because the fixed term was being used to assess her suitability, it was unlawful.  Ms Howe-Thornley could therefore challenge her dismissal.

The Employment Court found that The Salad Bowl failed to bring its concerns to Ms Howe-Thornley's attention and to give her a chance to respond before dismissing her.  Her dismissal was therefore unjustified.  She was awarded damages for lost wages and for hurt and humiliation.

Lessons learned?

•    A trial is just that, a trial.  To avoid issues of whether a job applicant is in fact employed, the trial should be as short as possible, and the applicant should not be "rewarded". 

•    The applicant should not be held out as being an employee, by, for example, being required to wear company clothing.

•    The employer should not derive a benefit form the work performed.  For example, if an applicant is required to make coffee or prepare food, this should not be sold to customers.

•    If you need longer than a few hours to assess an applicant's suitability, give them an employment agreement with a 90-day trial period.

Written by Shima Grice at 09:00





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