Home | Contact Us

Employers must be aware of the law before sacking new staff members

Readers will be aware of the legislation introduced by the National Party in 2009 regarding trial employment periods.

Small employers (those with fewer than 20 employees) can take people on for an agreed trial period of up to 90 days without the risk of employees bringing unjustified dismissal grievances. Employers must carefully read and apply the legislation. Two recent cases show how easy it is to get it wrong.

Tikaokao McClutchie was employed by Shane Parore at The Thirsty Dog Bar & Cafe in Napier. Weeks after she started work as manager last April, an employment agreement was signed that provided that her employment would be reviewed within a month to see if she was a satisfactory permanent employee.

The firm committed itself to giving her a chance to respond to concerns if her performance was not up to scratch. It said it would not terminate her employment unless a week before the review it told her of required improvements in her performance or behaviour.

In stating the trial period would be one month, the employer restricted itself to a period less than what it could have used. It gave itself the obligation of allowing her a chance to pull up her socks after a warning, before any dismissal could occur.

The Employment Relations Authority said that due to the legislation's wording, the trial period had begun when Ms McClutchie began work, not when her employment agreement was signed. Ms McClutchie began work over a month before she signed her employment agreement. Her dismissal was held to have occurred outside the agreed trial period.

The Thirsty Dog Bar & Cafe could not rely on the new law. Not only that, but the obligations it had imposed on itself to give a warning and a chance for the worker to pull up her socks had not been met.

It appears that Mr Parore told Ms McClutchie by phone that he was going to have to "let her go".

In a second call he made clear that she wasn't being made redundant and that he was firing her. In the end Ms McClutchie collected over $5000 net in lost wages and $2000 for humiliation, a total payment of about $7000 for what readers may see as a slovenly approach to the issue by the employer. The employer could have availed itself of the whole 90-day period instead of one month. It didn't need to restrict itself to how it would handle a dismissal where the work was not up to scratch. And it sacked Ms McClutchie over the telephone without a hearing. The outcome seems reasonable given all of that.

A second case, heard by the Employment Relations Authority in December in Christchurch, also addresses the new trial periods law.

Nicole Schneider was employed by BBX Distributors (now Barter Management NZ), as Receptionist/ Office Assistant/Trade Co-ordinator.

Her individual employment agreement provided for a three- month probationary period which, if invoked by either party, enabled termination on a day's notice.

She began work in January last year and was dismissed by phone on March 20 by the respondent's New Zealand manager, Jacques Gray. That day, Ms Schneider was told to take a call in the board room as Mr Gray was telephoning her from Auckland.

Mr Gray told Ms Schneider that her employment was being terminated. No reason was given. She was told the firm had to let her go. Immediately after the phone call, she was handed a written letter of dismissal signed by a person in authority, who was then in Australia. Ms Schneider claimed both unjustified disadvantage and unjustified dismissal.

Again, the employer made fatal mistakes. Firstly, the new legislation applies only to employment agreements entered into after March 1, 2009. Ms Schneider started work with the company in January 2009. Accordingly, the new legislation could not apply despite the employer attempting to rely on it.

The employer thought it was covered by the new law because of the fact that the dismissal occurred after the new law came into force.

It was wrong. The individual's employment had started before the new law, and accordingly, the employer could not rely on it.

Perhaps more controversially, the authority stated that regardless of that, a 90-day trial period did not exempt an employer from the duty of providing an opportunity for an employee to be heard when a dismissal is contemplated.

It goes without saying that dismissing someone without a hearing and deciding in advance you are going to dismiss them are fatal to an employer in normal circumstances.

We have a worker succeeding against an employer who did not properly understand its legal obligations.

The worker was paid $7200 net in lost wages, and $9000 net for humiliation and hurt feelings.

SO WHAT are the lessons for employers in all of this? The new law on trial periods enabling an employer to dismiss an employee without the worker having recourse to a personal grievance or legal proceedings in respect of the dismissal has to be followed strictly.

First, it can apply only to employment agreements entered into after March 1, 2009.

Second, a trial provision must be written into a written employment agreement and it must state that there will be a trial for a specified period of up to 90 days.

During that period the employer may dismiss the employee. If the employer does dismiss the employee, the employee is not entitled to bring a personal grievance or other legal proceedings in respect of the dismissal.

Third, the employer in question must employ fewer than 20 employees.

It is important to note that this provision protects an employer only with respect to a dismissal. Disadvantage grievances, discrimination cases, sexual and racial harassment claims, and duress claims are still possible.

Further, at least one decision would suggest that a hearing is still required before a dismissal, although opinions will differ on whether that was really Parliament's intention.

Dismissing any employee regardless of their time in the workplace is a serious matter. It will inevitably have a significant impact on the employee concerned.

Employees deserve respect, and their employer must carefully observe its legal obligations before taking the step of dismissal. That is not something that could be said for the way that Ms McClutchie and Ms Schneider were treated.

Peter Cullen is a partner at Cullen - the Employment Law Firm

Email: peter@cullenlaw.co.nz

Cullen - The Employment Law Firm is one of only eleven law firms in New Zealand approved to provide employment law services to Government and the public sector.

  • Subscribe to our Newsletter

  • Designed by Expert and Powered by MoST Infrastructure Platform

    MoST Content Management V3.0.6374