Work trials, are they legal?

Some employers use pre-employment assessments – typically a brief unpaid “on the job” trial before employment is offered – as part of the recruitment process.  What is the status of a person undertaking a trial of this kind?  Whether an individual can be said to have crossed over into the territory of an employee, which also includes a “person intending to work” is significant.

In Hussein v Otahuhu Community Pharmacy Ltd, the Employment Relations Authority determined that a job seeker on a pre-employment assessment was not an employee.   The parties had not agreed on terms of employment: indeed, there had been no discussion of salary, hours of work or other details.  The employer paid Mr Hussein $30, but the Authority said this did not indicate an agreed rate of payment; it was in the nature of an ad hoc payment made to an independent contractor.  Mr Hussein was therefore not an employee and could not bring a personal grievance.

However, in The Salad Bowl Ltd v Howe-Thornley, the Employment Court found the person on trial had become an employee because she had done more than simply observe the operation or even undertake practical tests.  Rather than undertake, for example a word processing test, she had “actually performed the work that needed to be undertaken in the business …She was required to dress in the business’s uniform, to present herself as a permanent employee would…no doubt she did all these things less efficiently than an experienced employee would have done, but the work performed during her work trial was nevertheless the actual performance of integral parts of the business”.

The Employment Court has previously suggested than an employer who wanted to “try out” a potential employee may have to engage that person on a 90 day trial period.   The days of trial periods are numbered however, with the Government introducing the Employment Relations Amendment Bill 2018 on 29 January 2018. This proposes to scrap trial periods for business with 20 or more employees.   While trial periods came with their own challenges, they did provide a valuable opportunity for employers to assess the suitability of new employees.

In light of the proposed changes, employers with 20 or more employees will need to reinvigorate their recruitment processes to ensure they get the information they need about a candidate before offering them a role.

We think employers may resort to using work trials more frequently, which if not used carefully, may be to their peril.    Care must be taken to ensure the individual does not cross over into the territory of an employee, and they are not doing any more than what is required to test their abilities for the position.

Larger employers should now be thinking about drafting a suitable a probationary period provision for their employment agreements.   It is worth noting that the key difference between trial periods and probationary periods is that a probationary period will not prevent an employee from raising an unjustified dismissal claim.  They should also be starting to build their processes and preparing managers for dealing with poor performance during a probationary period.

Workplace Law team

If you have any queries in respect of the above, or any other Workplace Law issues, please contact a member of Lane Neave’s Workplace Law team:

Employment: Andrew Shaw, Fiona McMillan, Gwen Drewitt, Maria Green,  Hannah Martin, Joseph Harrop, Holly Struckman, Alex Beal, Giuliana Petronelli, Abby Shieh
Immigration: Mark Williams, Rachael Mason, Daniel Kruger, Nicky Robertson, Julia Strickett, Ken Huang, Mary Zhou, Shi Sheng Cai (Shoosh), Sarah Kirkwood, Janeske Schutte, Lingbo Yu
ACC: Andrew Shaw
Health and Safety: Andrew Shaw,  Fiona McMillan