The 90 day no fault dismissal trial period

Read about the 90 day no fault dismissal period here


The first decision from the Employment Court (Heather Smith v Stokes Valley Pharmacy (2009) Limited) is out.

The 90 day no fault dismissal period is not the Get Out of Jail Free card some employers had thought.

What the Court has said:

  • Good faith principles apply.
  • The Employer does not have an obligation to advise of the proposal to dismiss the Employee but must use formal meeting procedures such as inviting the Employee to a meeting and telling the Employee that he/she is entitled to a representative or support person.
  • The Employer does not have to "consult" or obtain input on the decision to dismiss before dismissing the Employee.
  • Written reasons for the dismissal are not required.

But:

  • The Employer still needs to have a reason (not an arbitrary dismissal) for example, lack of progress in training, lack of performance, incompatibility.

Because:

  • The 90 day no fault dismissal period is not simply a way for Employers to dismiss at will.
  • The Employee must be told why they are being dismissed even if there is a limited ability to challenge the decision.
  • The good faith provisions of the Employment Relations Act 2000 require reasons to be given at the time of the dismissal.
  • The Employer must give notice in accordance with the provisions of the employment agreement.
  • If the employment agreement contains a specific series of steps then those must be complied with before a challenge to the justification for dismissal can be precluded.

What was a surprise?

  • The Court appears to take the view that transferring Employees will not be subject to 90 day no fault dismissal trial provisions although this is just one comment in the judgment.

So, an Employer employing on the 90 day no fault dismissal trial must:

  • Have the no fault dismissal trial period in writing before an Employee commences employment; and
  • Follow the normal requirements for good faith if dismissing within the 90 days; and
  • Seek advice before doing so.

Proposed extension

  • The Government is proposing to extend the 90 day no fault dismissal trial period to all Employers.
  • If successful this might be law in early 2011.
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Caroline Silk