Preston Russell Law - Legal Services for Southern People

Probationary Periods - Businesses with 20 or more employees

Saturday, April 17, 2010 by Mary-Jane Thomas, partner category Work to Rule

Please do not get confused by this case. It was decided before the new law came in about 90 day probationary periods. The case is only relevant to those employers who have 20 or more employees and have a probationary term in the individual employment agreement.

Don’t forget that the new law allows those employers with less than 20 employees to employ someone (as long as it is included in the Individual Employment Agreement) on a trial 90 day probationary period and in those cases there is no need to go through the procedure set out in this article.

Ms W was hired as a bar/restaurant manager. The owner was on holiday when the existing manager left, so the head chef was responsible for hiring a replacement. Ms W began work on 9 December, but did not sign an employment agreement until 19 December. The employment agreement contained a three week probationary period.

Ms W only became aware of this condition when she signed the agreement, but accepted that she knew there was a risk that her employment might end at the conclusion of the probationary period. However, she didn’t think there was a huge risk that her employment would end because she had already been working for 10 of the 21 days and had been receiving only positive feedback on her performance from the head chef.
 
Ms W’s problems began when the owner arrived back from his holiday. He took an instant dislike to Ms W to the point that he refused to shake her hand when she introduced herself. The owner asked the head chef why he had employed Ms W and advised that he did not like her. The chef’s response was that she was a good worker.
 
On 23 December Ms W was handed a letter that gave her notice that her employment would end on 30 December. The owner believed that this was his right as an employer.
 
The ERA determined that this was clearly an unjustified dismissal. Although the employer was entitled to have a probationary period in the agreement, the employer must do three things before a probationary period can be relied on to dismiss an employee:
 
  1. Notice of the specific allegation against the employee and its likely consequences must be given; and
 
  1. There must be a real opportunity for explanation; and
 
  1. An unbiased consideration of that explanation.
 
The owner made no effort whatsoever to involve Ms W in the process that led to her termination at the end of the probationary period. In fact, her dismissal was completely unexpected. He also had no good cause to terminate Ms W’s employment.
Ms W was awarded $7,580 in lost wages and $6,000 compensation for her unjustified dismissal.  
 
So, those businesses employing 20 or more people – it is OK to have a probationary period in your employment agreements, however if you wish to dismiss an employee inside that probationary period, the process discussed above must be followed.