The Employment Relations Authority has recently reminded employers of the strict legal requirements for trial periods and the risks in trying to rely on them incorrectly. The case also highlights how an employee’s own conduct can affect remedies when compensation is awarded.
In Wilkins v DD Group Holdings Ltd, Ms Wilkins claimed she was unjustifiably dismissed. The company denied this and said the dismissal was valid under a trial period clause in her employment agreement.
Wilkins v DD Group: trial period case facts
On 2 May 2024 the company emailed Ms Wilkins offering her a role to begin on 4 June, attaching an employment agreement with a 90-day trial period. She replied the same day saying she would return it signed on Monday.
Before her start date, the company invited her to attend a training course on 6, 7 and 8 May, which she was paid for. Her behaviour during training raised serious concerns: she frequently left sessions to vape or take phone calls, interrupted speakers and colleagues, mocked others, rolled her eyes, and gave the impression she did not want to be there.
On the last day of training, 8 May, she handed over the signed agreement. Following the course, the directors decided not to proceed with her employment and terminated her under the trial period clause. Ms Wilkins raised a personal grievance for unjustified dismissal.
ERA decision: why the trial period failed
The Authority held that a trial period is only valid if the employment agreement is signed before the employee starts work. Ms Wilkins had already started work on 6 May when she attended paid training, two days before signing. The company could not rely on the trial period and her dismissal was unjustified.
Compensation reduced due to employee behaviour
When deciding remedies for unjustified dismissal, the Authority must consider whether the employee’s own behaviour contributed to the situation. If it did, compensation can be reduced.
Here, the Authority said that but for Ms Wilkins’ contribution, it would have awarded three months’ wages and $8,000 for humiliation, loss of dignity and injury to feelings. Given her behaviour, it found she was 70% responsible and reduced compensation to just under four weeks’ wages and $2,400.
Law change: limits on compensation and remedies
Parliament is progressing amendments to the Employment Relations Act. The changes will mean that even if an employee succeeds with a personal grievance, if their own actions contributed to the situation, the Authority or Court may not award compensation for humiliation, loss of dignity or injury to feelings. Reinstatement may also not be available.
A related change is that if the employee’s conduct amounted to serious misconduct and contributed to the dismissal, the Authority or Court may decline to award any remedies at all.
This will create new challenges. For example, if the employer is mostly at fault but the employee is found just 5% to blame, the new law could prevent any award for humiliation or loss of dignity. It will be interesting to see how the Authority and Court apply these provisions once they come into force.
Get employment law advice on trial periods
Trial periods are a useful tool, but they must be used with precision. If you use them in your business, or run training or inductions before start dates, now is the time to review your agreements and processes.
Contact Mike Gould or our employment law team for practical advice to make sure your trial periods are legally effective and to prepare for the upcoming law changes.
