Welcome back to Part 3 of the Good Faith series. To date, we have covered the concept of Good Faith in broad terms, and its application to fixed-term employment.
In this article, we get into the nitty gritty of Good Faith within employment relationships where the employee’s individual employment agreement contains either a Trial Period or Probationary Period provision. We also do a brief overview Good Faith and bargaining.
These periods are both used by an employer to assess an employee’s ability to do a job, but the manner in which an employer can dismiss differs greatly depending on which period is in play.
The duty of good faith does not change whether an employee is working within a trial period, a probationary period, or is not bound by either!
What is a Trial Period?
Commonly known as a 90-day trial period, an employer may require an employee to be bound by a trial period that is up to (not exceeding) 90 days in length.
A valid 90-day trial period is a written provision within an employment agreement that follows section 67A of the Employment Relations Act 2000. It has to be worded in accordance with that section, and can only be used on an employee who has not previously worked for the company.
So long as they provide the correct notice and act in accordance with the provision, an employer is able to dismiss an employee pursuant to a trial period without the formalities typically required, and is protected from the raising of a personal grievance for unjustifiable dismissal.
To gain an in-depth understanding of 90-day trial periods, go to our Employment Law Glossary here: https://sackedkiwi.co.nz/learn-employment-101-90-day-trial-period/
What is a Probationary Period?
A probationary period can range in length, and is typically three to six months. An employer should use a probationary period to closely monitor an employee’s performance, work ethic, and conduct.
Unlike a valid 90-day trial period, employers still need to follow a full and fair process prior to termination under a probationary period clause. Failure to do so will leave an employer exposed to a personal grievance for unjustifiable dismissal.
Where does Good Faith fit in?
Good Faith involves demonstrating a genuine intention to do what is right, fair, and beneficial for the employment relationship.
While an employer dismissing an employee under a 90-day trial period may not “need” to follow a process or formally give a reason for termination, a fair and reasonable employer acting in good faith will:
- Noitce: Put the employee on notice within the 90-day period of any concerns they may have, and give the employee an opportunity to remedy those concerns; and
- Reasoning: Upon termination of employment, give the employee a reason why they are not being chosen to continue with the business, and treat them with dignity and respect.
Before dismissing an employee within their probationary period, a fair and reasonable employer acting in good faith will:
- Raising Concerns: Raise any concerns with the employee, and explain how they are not meeting the required standards (ensuring those standards are realistic and achievable); and
- Reasonable Time: Give the employee a reasonable time to meet the required standards, and use reasonable endeavours to assist them during this time; and
- Understanding Consequences: Ensure the employee understands the potential consequences of not meeting the required standards from the outset (such as their employment being at risk).
While an employee dismissed pursuant to a valid 90-day trial period may not be able to raise a personal grievance for unjustifiable dismissal, they are not prevented from raising a personal grievance pursuant to section 103(1)(b) – (k) of the Employment Relations Act 2000. This includes claims for sexual harassment, discrimination, and unjustifiable actions that left the employee disadvantaged.
An employer that does not act in good faith places themselves at risk, regardless of the wording within their employment agreements.
If you ever feel concerned that you are not being treated in good faith at work, please don’t hesitate to call us for advice!
What is Bargaining?
Bargaining is the process of negotiating employment terms, whether in individual or collective agreements. Under New Zealand’s Employment Relations Act 2000, all parties involved in bargaining (employers, employees, and unions) are required to act in good faith throughout the process.
There are two primary forms of bargaining:
- Individual Bargaining: This occurs between an individual employee and their employer, where employment terms are negotiated and agreed upon.
- Collective Bargaining: This occurs between an employer and a union representing a group of employees, where terms for multiple employees are negotiated at once.
Regardless of the type, bargaining must be approached with honesty, openness, and a genuine attempt to reach an agreement.
How Does Good Faith Apply to Bargaining?
Good Faith is central to the bargaining process, whether for individual or collective agreements. Both employers and employees (or their representatives) are expected to:
- Communicate openly: Share relevant information, particularly if it influences decisions about employment terms.
- Engage constructively: Both parties must enter into negotiations with the intention of reaching an agreement, rather than delaying or obstructing the process.
- Respond to proposals in a timely manner: Employers and unions should consider and respond to each other’s proposals during collective bargaining, without unnecessary delays.
During individual bargaining, employers should ensure that employees:
- Have time to seek advice about the employment agreement before signing.
- Understand the terms, including important clauses like trial or probationary periods.
- Are not pressured to accept the agreement without adequate consideration.
Failure to bargain in good faith can lead to intervention by the Employment Relations Authority, which may issue recommendations or orders to address breaches of Good Faith during negotiations. If you ever feel concerned that you are not being treated in good faith at work, please don’t hesitate to call us for advice!
Your Job. Your Rights. Our Fight.
Legal Disclaimer
The content posted on the Sacked Kiwis website should not be considered or relied upon as legal advice or opinion. The information presented here is not intended to serve as legal guidance. Over time, laws and regulations evolve, potentially altering the accuracy of previously shared information. Updates in jurisprudence or legislation (for example, changes to the Employment Relations Act), which could happen without immediate notice, may render the legal information on this platform outdated or obsolete. Seeking legal advice is always advisable.
Should you need employment advice, please don’t hesitate to contact us through our toll-free hotline.
Further Reading
Rethinking Cooling Off Periods ↗
