What’s the difference between trial periods and probationary periods?

What’s the difference between trial periods and probationary periods?

At Watermark it is common for us to see employers confusing 90 day trials and probationary periods.  However, from a legal perspective, probationary and trial periods are very different in their form and effect.

The purpose of a probationary period is to assess an employee’s suitability for the job. During the probationary period, an employee must receive proper training, be given feedback and be provided with the opportunity to improve and address any of the employer’s concerns. If an employer wishes to dismiss an employee in their probationary period, the dismissal must be reasonable and a fair process must be followed. An employee who is dismissed during the probationary period still has the right to raise a personal grievance challenging their dismissal.

A 90 day trial is very different. It gives the employer significant power to exit employees in the first 90 days of employment, as long as the strict requirements in section 67A of the Employment Relations Act 2000 have been met.   If all statutory requirements of s 67A are met, then an employee is prohibited from raising a claim for unjustified dismissal.

The consequences of confusing these two concepts is illustrated in the recent decision of Marchant v Accord Plastics Limited. The employer in this case believed its employment agreement contained a 90 day trial clause, but the clause in question failed to meet any of the statutory requirements for 90 day trial clauses. The Authority held that the clause was in reality a probationary clause and the employee was therefore entitled to raise a personal grievance challenging his dismissal.

 

If you need advice on your specific situation or any other matter please fill out the contact form or ring the Watermark team directly to make an appointment.

Kylie Hudson

Associate