In December 2023, the (then) new government had passed legislation that reintroduced the use of trial periods for new employees being available for employers of all sizes. With the increase in employers’ ability to use trial periods, it is another timely reminder that the rules regarding trial periods are enforced very strictly.

In the case of Finnigan v DogHQ 2020 Ltd the Employment Relations Authority (Authority) considered the use of a trial period. It’s important to note that at the time of this case, only small businesses could use trial periods. Within a trial period, an employer may give notice of termination of employment and the employee is unable to bring a personal grievance for unjustified dismissal. DogHQ was a dog daycare service in Auckland. Ms Finnigan, the employee, was hired by DogHQ in July 2021. Only a few weeks after she started work, New Zealand entered a COVID-19 Alert Level 4 lockdown and DogHQ was unable to operate until mid-October. Ms Finnigan was paid her usual wages during this period but, once lockdown restrictions eased, DogHQ became concerned that after only one month of work it was not enough to have properly assessed her.

DogHQ emailed Ms Finnigan to ask if she would agree to extend the 90-day trial period until 13 December 2021. This email did not advise Ms Finnigan that she was able to seek independent legal advice. Ms Finnigan responded nine minutes later saying she agreed to an extension to the trial period. Subsequently, on 12 December 2021, DogHQ relied upon the trial period to terminate Ms Finnigan’s employment. Soon after, Ms Finnigan raised a claim for a personal grievance for unjustified dismissal and unjustified disadvantage. 

At the hearing, DogHQ advanced the argument that the trial period was suspended by the lockdown. The Authority did not accept this proposition and found that there was a new agreement for a trial period and Ms Finnigan could not be have agreed to another trial period as she had been previously employed by DogHQ (the period prior to the lockdown). Ultimately, the Authority found that Ms Finnigan’s claim of unjustified dismissal was made out as DogHQ had dismissed her on the basis that her employment was within the invalid 90-day trial period. No substantive justification other than this reason had been provided.

The Authority also found that Ms Finnigan had suffered an unjustified disadvantage by DogHQ’s failure to advise her, as per s 63(a) of the Employment Relations Act 2000, that she was entitled to seek independent legal advice about the extension of the trial period and that DogHQ needed to give her a reasonable opportunity to seek advice. 

The case also highlighted another developing issue – the use of online advice. In the age of the internet, using online services (such as online consults with doctors or even AI products like ChatGPT) can be appealing due to the convenience and often lower price tag. In this case, the DogHQ sought advice from an online service called “JustAnswer” – a legal advice website. Advice was provided from an individual online who described herself as an ‘attorney’ and who provided advice that DogHQ could extend the trial period. Whilst we can speculate that this option might have seemed more affordable at the time, it ultimately proved expensive as the Authority ordered DogHQ to pay Ms Finnigan the sum of five weeks’ lost wages and $18,000 for distress.  

There are several useful learnings and reminders from this case. First, if an employer is going to use a trial period, then it can only be used for new hires. Second, 90-days means just that trial periods cannot be extended. Third, when introducing workplace changes including changes to employee terms and conditions it is important to consult and advise employees of their right to obtain independent legal advice. Finally, be mindful that AI and online advisers can make mistakes or give the wrong information.   

Contact your Wynn Williams employment team for all your workplace needs.