Ending a 90-day trial

Q: I recently took on a new employee, who isn’t performing as well as I hoped he would. I have decided I need to let him go. His employment agreement has a 90-day trial period in it. What do I need to do to terminate his employment under the trial period? A: Trial periods can be a useful tool for employers wanting to check an employee’s suitability, but because there are a lot of ways that these clauses can be invalid, they can be a real trap.

If you terminate an employee’s employment under an invalid trial period clause, the employee could bring an unjustified dismissal claim in the Employment Relations Authority. So, before going any further, you need to make sure that the clause is valid.

The first thing you need to check is that the employee was a new employee when he signed the employment agreement. That is, he hadn’t ever been employed by your business before.

One of the traps on this point is that the employment agreement has to be signed by both parties before the employee starts work, otherwise the employee will not be a new employee.

The next point to check is that the trial period is in the signed employment agreement, not a signed offer letter.

Then you need to make sure that the clause outlines the terms and impact of the trial period.

If you can tick all of those boxes, it sounds as though the trial period will be valid.

Both you and the employee owe each other a duty of good faith. This requires you to tell the employee where/how he is falling short of expectations.

If the employee still doesn’t come up to par and you decide to terminate, there are a few more traps.

The first is that the employee must be given notice of termination before the end of the 90-day trial period. Ninety days is 90 days, not 90 working days.

Notice should be in writing and it pays to communicate the reason for termination, so as to guard against any suggestion that it was for a discriminatory reason.

Finally, the notice should be given in accordance with the terms of the employment agreement. So if the agreement says that one week’s notice, make sure you give a week’s notice.

If you are in any doubt, take some advice before terminating.