Farrand Orchards Ltd v Tane

Farrand Orchards Limited verbally offered Mr Tane a job after a lengthy interview. The employer claimed the 90-day trial period was discussed, but Mr Tane disagreed. Later, they discussed accommodation as part of the job, but again, the trial period was not mentioned.

A written employment agreement was emailed to Mr Tane, containing a trial period clause, but it was incomplete and unsigned. The covering email suggested all terms were negotiable and did not highlight the trial period. Mr Tane replied, planning his move and indicating he would review the contract. He started work before signing the agreement.

After some time, FOL dismissed Mr Tane under the trial period clause. Mr Tane challenged the dismissal, arguing the trial period was invalid because it was not properly agreed before he started work. The Employment Relations Authority sided with Mr Tane, and FOL appealed to the Employment Court, focusing on whether the trial period was valid.

The Employment Court confirmed that the 90-day trial period was invalid because it was not properly agreed and signed before Mr Tane started work.

The Court found that the employer did not highlight the trial period or explain the employee’s right to seek advice. The covering email suggested all terms were negotiable, which further undermined the employer’s claim that the trial period was agreed.

As a result, the Court upheld the Authority’s finding of unjustified dismissal. The remedies and costs ordered by the Authority remained in place, and FOL was required to address outstanding payments promptly.

If you are hiring staff and want to use a 90-day trial period, you must ensure the clause is included in a written employment agreement, and that the agreement is signed before the employee starts work.

Do not rely on verbal discussions or send agreements after the employee has begun working. Always highlight the trial period and explain the employee’s right to seek advice about the agreement.

This case shows that failing to follow these steps can lead to personal grievance claims, financial penalties, and compliance orders. It is not enough to assume the employee understands the trial period or to rely on past practices. Clear communication and proper documentation are essential.

To avoid disputes and ensure compliance, follow these practical steps when hiring employees under a trial period:

The 90-day trial period is governed by section 67A and 67B of the Employment Relations Act 2000. These sections require that the trial period be agreed in writing and signed before the employee starts work. The employer must also inform the employee of their right to seek advice about the agreement.

If these requirements are not met, the trial period is invalid and cannot be relied upon to justify dismissal. Employers should regularly review their hiring processes to ensure compliance with these statutory requirements. Failure to comply can result in personal grievance claims, remedies, and costs orders.