Unpaid work trials in New Zealand are not uncommon, particularly in the hospitality industry. They have advantages for both parties; the hopeful employee-to-be gets practical training, and the potential employer gets free labour and the chance to see how the worker performs. However, just such a scenario turned sour for a business owner when she texted a worker who had completed a five hour (over two days) unpaid work trial with her, and told her there was no job for her. She believed that the worker had taken money from the till. The worker, Ms Howe-Thornley, took a personal grievance case against the business owner for unjustified dismissal and won her case at the Employment Relations Authority. The business owner appealed to the Employment Court but lost there also. The Court found that, under the provisions of the Employment Relations Act 2000 (ERA), specifically sec 66, ss 67A, and 67B, Ms Howe-Thornley, was an employee and was therefore unjustifiably dismissed for theft. This was because, as required by sec.103A ,ss.3 of the ERA, the employer did not raise her suspicions of theft to the employee, or investigate them, and did not thereby give the employee an opportunity to respond. The judge said that employers who want to 'try out' potential employees may have to engage them as employees but ensure that there is a trial period of up to 90 days allowed for in the employment contract. The ERA allows that an employee can be dismissed without reason in that time frame. However, the ERA also states that such a trial period must specify that, in such an event, the employee is not entitled to take a personal grievance claim (see ERA sec.67A(2).
This case raises important questions around unpaid internships or training that is undertaken as part of obtaining a qualification. The Employment Court judge recognised this and said: "What is the status of people undertaking practicums as part of a training or qualification, for example trainee teachers on assignments to schools teaching students under supervision and being appraised? What of the legal status of trainee doctors attending with consultants in hospitals and undertaking professional tasks consistent with their training and skills? It has been thought unlikely that such trainees would be employees of schools’ boards of trustees or the relevant district health boards, but the level of work undertaken by them may impose a degree of legal liability on those persons vis-à-vis third parties". He went on to suggest that if his judgment would impose "unreasonably arduous obligations on prospective employers and employees", it might be that "Parliament should consider the scope of the restrictions that it wishes to impose concerning work trials".
Until then, it would be best to play it safe and hire employees under an employment agreement that has a trial period in it, such clause adhering to the requirements of the ERA secs. 67A and 67B.
Posted: Mon 19 Sep 2016