90-Day Trial Period Compliance Reminder for Employers

Trial periods remain a valuable tool for New Zealand employers, but they are also an area where technical mistakes regularly invalidate the protection employers believe they have. 

Recent case law decisions continue to confirm that strict compliance is required. Minor drafting or timing implementation errors can expose employers to full personal grievance liability.

A trial period when managed correctly allow employers to dismiss a new employee within the first 90-days of employment without the employee being able to raise a personal grievance for unjustified dismissal.

Importantly, a valid trial period:

• Only applies if every statutory requirement is met and they are implemented correctly.
• Provides no protection if incorrectly implemented.

Trial periods may only be used if:

• The employee has never worked for the employer before.
• The trial period is properly agreed in writing before employment starts.

If an employee has previously worked for the employer even briefly or years earlier, a trial period cannot be used.

To be valid, a trial period clause must:

• Be in writing, including a legally compliant clause.
• The employee must have an enough time to seek independent advice prior. 
• Only be used for new employees.
• Be signed before the employee commences work. 
• Be no longer than 90-days (calendar) days maximum. 
• Notice of termination must be given correctly, if terminating employment under a trial period. 
• Cannot be used for migrant employees when the employer is accredited under the AEWV.

If any of these requirements are missed or incorrect, a trial period will likely be invalid.

The above is only high-level, refer to Employer Pro’s employer-focused resources, including our comprehensive Employer Toolkit available for managing ‘90-day Trial Periods’, including step-by-step guidelines for correct implementation, a template termination letter, a compliance checklist and more for ensuring a trial period is managed correctly.

Common Employer Mistakes

• Using incorrect 90-day trial period clauses in employment agreements.
• Failing to give employees a real opportunity to seek independent advice.
• Allowing employees to start work before signing an employment agreement.
• Applying trial periods to existing or returning employees.
• Failing to understand the difference between a trial period and a probationary period. 
• Including trial periods that are longer than 90-days in duration. 
• Not giving notice of termination correctly when dismissing under a trial period. 
• Terminating employment after the 90-day period has expired. 

Any of these errors has the potential to expose an employer to full personal grievance liability since they can invalidate a 90-day trial period and extinguish the legal protection it affords employers. 

This article is provided for general information only and does not replace professional advice. Employers should seek advice specific to their circumstances from Employer Pro if in doubt on their matters involving 90-day trial periods, including related personal grievance claims and disputes. Employer Pro has a range of employer focused resources and services available through our competitive Employer Protection Packages.

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