A 90 day trial period allows an Employer to employ a new staff member with a single trial period of 90 days or less. A trial period allows an Employer to assess and confirm an Employee’s suitability for a position, and terminate an employment relationship if it becomes apparent that the Employee’s skills, experience or even attitude are not a good fit for the job. It restricts an Employee from bringing a personal grievance in respect of that dismissal, however it does not take away the Employees right to pursue a personal grievance on other grounds such as discrimination or harassment.

Employers choosing to use a 90 day trial period need to ensure that correct process is followed from the outset of the employment relationship otherwise a terminated employee may be able to bring a successful personal grievance claim for unjustified dismissal. Failure to follow correct process dramatically increases the risk of the Employment Agreement being found unlawful by the Employment Relations Authority.

In order to use a 90 day trial in an employment agreement the Employee must be new to the business. This means that they cannot have undertaken any work previously for the Employer, even if the role is different. You need to be careful if you wish to have a potential Employee complete a pre-employment assessment during the interviewing stages. A pre-employment assessment is risky because if certain requirements are not met then it could be found to be considered work and you could be liable for unjustified dismissal.   

For a 90 day trial to be legally valid it must be written into the Employment Agreement (the agreements held in all our products contain suggested 90 day trial clauses which are legally binding). The Employee must be given reasonable time to consider their Employment Agreement and the Trial period, make sure they understand what a 90 day trial could mean for them. By signing their Employment Agreement with the trial clauses included, the Employee is agreeing to the trial period. It is important that the Employee signs this before they start any work, if they have not signed then you cannot enforce a trial period and should postpone their commencement date until it is signed.

A trial can be a maximum of 90 calendar days, less if you choose. There is no ability to extend the trial period past 90 days. The Employment Agreement should state that the trial starts from the work commencement date and state what date it finishes. You can use our 90 day calculator to ensure that you have the correct finish date.

From 29th October 2023, employers who are accredited under the ‘Accredited Employer Work Visa’ (AEWV) scheme cannot use 90 Day Trial Periods with migrant workers. This is due to Immigration New Zealand’s policy that has strengthened protections against migrant worker exploitation, which extend to preclude the use of 90 Day Trial Periods.

If your Employee is still employed after the 90 days then they are now a permanent member of your staff.  If you decide within the 90 days that the Employee is not suitable for the position then you have the ability to terminate the employment relationship.

While legally you do not have to give a reason for terminating employment under a 90 day trial, you are still obligated to act in good faith with the employee so it is recommended that you firstly speak to employee during the trial to indicate where they are failing to meet your standards and that improvement is needed. They should be afforded the opportunity to improve. When it comes to giving notice to terminate, supply a reason for their dismissal in your letter of termination. Our Termination Guide contains a sample letter of termination that can be used when terminating under a 90 day trial.

Unless you are terminating for serious misconduct during the trial period, you are required to give the Employee written notice of the termination. Notice of dismissal must be given before the 90 day trial period ends even if their final day falls outside of the 90 day period. The notice period for termination will be outlined in the Employment Agreement, we suggest a one week notice period however you are free to vary this. If it has been written into the Employment Agreement you have the right to pay the Employee in lieu of notice.

The 90 day trial period and the Employment Agreement are very powerful tools for Employers who introduce them in a correct, fair and legal way, because of this power the Employment Relations Authority are applying the Employment Relations Act strictly. It is important to ensure that all steps in proposing a 90 day trial and terminating any Employee on a trial are completed lawfully and no steps are missed.

If you are unsure if your Employment Agreement is correct, or if you are looking to terminate an Employee under the trial clause, then before taking any further steps please contact us on 0800 15 8000 to discuss.

Remember:

• To impose a 90 day trial, the Employee must be new to the business.
• The terms of the 90 day trial need to be expressly written into the Employment Agreement.
• The Employee must agree to the terms of the 90 day trial.
• The trial period cannot be for more than 90 days, but can be less if you decide.
• Notice of dismissal must be given in writing to the Employee before the end date of the trial period.
• You do not have to give a reason for dismissal however under good faith obligations it is suggested you do.
• The employee cannot be a migrant worker under the AEWV scheme.
• Safeguard yourself from any unjustified dismissal personal grievances by following correct procedures.