Unlocking the Potential of Trial Periods
With the inauguration of the new Government in 2023 came a wave of regulatory changes, including updates to employment laws. On 23 December, amidst the festive season when most of us were enjoying beach outings and celebratory gatherings, an amendment to the Employment Relations Act took effect, expanding the utilisation of trial periods to all businesses irrespective of their size.
Previously, this provision was exclusive to businesses with 19 or fewer employees. However, while this change presents opportunities, it also brings forth certain exceptions and responsibilities that employers must grasp when implementing trial periods in their operations.
Trial periods serve as a mutually beneficial evaluation phase for both employers and employees, allowing them to gauge the suitability of the role. Should either party wish to terminate the employment, a pre-agreed shorter notice period, as outlined in the employment agreement's trial period clause, facilitates swift resolution. From the employer's perspective, trial periods provide the flexibility to terminate employment without the need to cite specific reasons, thereby reducing the risk of personal grievances.
However, employers must be mindful of exceptions and responsibilities associated with implementing trial periods in their businesses.
From the employer's standpoint, trial periods allow for termination without the requirement to specify reasons, thus mitigating the risk of personal grievances. Trial periods can last up to 90 calendar days from the commencement of employment, although shorter durations can be agreed upon and documented in the employment agreement. And to utilise trial periods, employers must ensure clear inclusion and agreement in the employee's written contract before their first working day, avoiding actions that might invalidate the clause such as pre-start training/inductions, recruitment trials, or other pre-commencement work practices.
Exceptions to the trial period rule exist. These remain limited to new employees and cannot be applied to individuals with prior employment history within the organisation (including volunteer or contracting roles) or those covered by collective employment agreements. Moreover, trial periods cannot be utilised in employment offers under the AEWV Scheme.
Throughout the trial period, employers are obligated to act in good faith, providing adequate training, communication, and fair treatment, and and while personal grievances related to employment termination are barred during trial periods, claims regarding mistreatment during employment can still be raised.
When it comes to managing employment termination, adherence to the notification timeframe outlined in the trial period clause is essential. Employers must ensure the payment of any agreed notice period (which can be a lesser period that for employment that continues beyond the trial period). Although reasons for termination during trial periods are not mandatory, clear communication is encouraged. Failure to notify within the specified timeframe renders the trial period clause invalid, and the employee continues in their role without additional agreements.
In competitive job markets, employers should carefully consider how trial periods may influence potential candidates' perceptions. Candidates may negotiate offers without trial period provisions or seek shorter durations, especially in high-demand fields.
Ensuring accurate documentation of trial periods and other employment terms is paramount. Seeking guidance from HR consultants can facilitate a smooth implementation process and ensure compliance with legal requirements.
In conclusion, while trial periods offer benefits for both employers and employees, careful consideration of legal requirements, communication, and recruitment strategies is essential for effective implementation. For assistance in reviewing and updating employment agreements, as well as guidance on trial period implementation, our team of HR consultants is available to support your organization. Contact us today for personalized assistance.
Key Points:
The trial period serves as a mutual assessment phase for both employers and employees to evaluate the suitability of the role. It typically involves a shorter notice period in case either party wishes to terminate the employment relationship.
From the employer's standpoint, the trial period offers the flexibility to terminate employment without specifying a reason, thus mitigating the risk of personal grievances.
The trial period spans a maximum of 90 calendar days (not working days) from the commencement of employment, although a shorter duration can be mutually agreed upon and documented in the employment agreement.
Employers must ensure that the trial period clause is clearly outlined and agreed upon in writing before the employee's first working day, avoiding practices (pre-start training/inductions, recruitment trials, or other pre-commencement work practices) that might invalidate it.
Trial periods are applicable only to new employees and cannot be enforced on individuals with prior employment history or those covered under Collective Employment Agreements.
If termination occurs during the trial period, the employer must compensate the employee for the notice period as stipulated in the employment agreement (while reasons for termination during the trial period are not mandatory, transparent communication with the employee is considered best practice.)
Although employees cannot file personal grievances regarding the termination of employment during the trial period, they retain the right to address any mistreatment or discriminatory practices during their tenure.
Disclaimer This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.