Advance notice necessary in termination of trial period|Employment Law Update May

Recently, the Court of Appeal in Ioan v Scott Technology NZ Ltd decided that the words “notice of the termination” in s 67B — the provision of the Employment Relations Act 2000 enabling a trial period to be terminated if notice is given before the end of the trial period, to take effect before, at or after the end of the period — were not to be given a different meaning than they would have in general employment law.


This decision was invoked in the context of a trial period provision that provided that the employer could terminate with immediate effect, a provision that the employer used to do precisely. The Employment Court noted that s 67B contemplated advance notice being given where the termination is to take effect at or after the end of the trial period. The only uncertainty lay with the situation in which both the notice and termination were to take place before the end of the trial period. Was it permissible to give no advance notice?


The Court looked at the well-settled general law pertaining to notice in the employment sphere, observing that, where an agreement was silent on the period of notice, it was implied that a reasonable period of notice was required, and that the employment institutions had the power to set a reasonable period of notice. (Only where there was serious misconduct was summary dismissal possible.) The authorities confirmed that notice related to a future event so that an employee could order their affairs. It was therefore unlikely that Parliament would have intended that a trial be terminable immediately, contrary to the general law, without saying so expressly. Sections 67A and 67B constrained parties to a trial provision from contractual freedom. And the good faith obligations set out in the Act strongly pointed to the necessity to give a period of notice when terminating the trial of a vulnerable employee.

Allied Investments Ltd t/a Allied Security v Cradock[2019]


Information reproduced with permission of Wolters Kluwer


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