Essential Update - 22nd September 2023

Essential Update – 22nd September 2023


In this update:


New Bills coming through Parliament:

This is really just out of interest – but politically may have meaning.  There are two relevant Bills coming through:

  • A Restraint of Trade Bill, which would effectively mean that all small businesses would be unable to use “non-compete” clauses. (It imposes a significant cost on a company for applying such a clause and would restrict its use to only those on significantly higher salaries.  It is a Labour party members bill but I’m assuming that even though it has passed Select Committee, it would be unlikely to get passed pre-election.

  • A 90-day Trial Bill (members bill from the Act party), which hopefully will not get debated until after the election. If passed all companies would again be able to use the 90-day trial period.


Key Case Law developments

  1. Independent Contractor vs Employee

We are conscious that a significant number of businesses are wanting to engage Independent Contractors, rather than employees.

Historically, the tests to determine whether or not a person is a contractor or an employee was based on three tests:

  • The level of control exercised over a person;
  • The extent of integration of that person in the business; and
  • How fundamental they are to your business

Case law is now reflecting the Employment Court’s view of a broader view of the types of workplace relationships that the Employment Relations Act intended to cover and, in particular, the minimum protections that would apply to workers. This means that more Independent Contractor relationships should actually be considered Employment relationships and minimum employment protections would, therefore, apply.


We advise that, when looking at these options, you seek professional advice before making this decision.


  1. 90-day trial, $30,500 cost for non-compliance with the law

Recent case law has highlighted the risks of not implementing the 90-day trial period in accordance with legal requirements.  There is simply no ability to vary this – however logical, or agreed to, it is.

One company was ordered to pay their employee $30,500 for unjustified dismissal and hurt and humiliation reparation after relying on an invalid 90-day trial clause.

The company made two small but significant mistakes, either of which would invalidate the 90-day trial clause;

  • They failed to provide for a notice period in the clause.
  • They failed to ensure that the contract was signed by both parties before the employee started working for them.

The company dismissed the employee, via text message, giving no notice and failing to follow any fair process – only relying on using the defective clause.


If you have any questions around the 90-day trial clause and/or how to use it, please get in touch.


Jess on Leave – Limited Capacity from mid-November till the New Year

She’s been planning it all year and thoroughly deserves it - Jess will be taking her family overseas to see their family in the UK and Europe.  From November 20 till January 8 it will just be me!

If you expect to require some HR assistance from us this side of Christmas, please get in touch as soon as possible. I will need all the notice I can get!


Essential HR are here to help.  For ongoing help call us on – 03 3650532 (voice messages are automatically relayed to Mike), or you can contact Mike directly on 027 2808546 or And if you need to conference call, we are all set up with Zoom.

I’m happy for you to pass this Update on to others.

Need help managing staff?

Mike has a wealth of experience advising on every aspect of the employer-employee relationship. I can give you per-phone guidance or work along side you to make things happen.

Keeping You Posted

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