Waiving a 90 Day Trial Period

There may be perfectly valid reasons for an employer wanting or agreeing to waive a 90 Day Trial period for an employee, but be assured that once you have agreed to waive a 90 Day Trial, then you cannot go back & the protection against unjustified dismissal claims afforded by the trial period will be lost.

It's always been common for money lending institutions to require proof of income from their clients in order to assess affordability of loan repayments. We're hearing more frequently that the sighting of a client's employment agreement is being requested, and that a 90 Day Trial Period clause is a red flag for the lender. Often lenders will not loan money to employees who have a trial period clause in their employment agreements and want it removed before they do.

This situation results in a employee requesting to 'waive' the 90 Day Trial, albeit only for the benefit of satisfying the lending company, or so they initially tell their employer.

A recent case brought before the Employment Relations Authority (ERA) demonstrates how they view such an undertaking by an employer.

Wilson v Alley Cantina Limited [2024] NZERA Christchurch 525 saw a manager waive a 90 Day Trial Period in order to help an employee secure a loan. Subsequently, the employer later decided to call it a day and terminate the employee's employment relying on the same 90 Day Trial clause (which they waived in writing).

The employee contended this had been waived in writing and therefore no long applicable - essentially that the employer was not able to rely on it to terminate their employment. The employer put up several different arguments; the manager did only so for the benefit of the employee to secure a loan, the manager did not have the authority to do this, and no variation to the employment agreement had taken place and the employee had promised not to raise a grievance in exchange for this letter.

Needless to say the ERA did not agree with the employer's defence. As far as the employee was concerned her immediate manager had authority over her and the running of the business. Having the assurance of the trial period being waived was reasonable in the ERA's view for the employee to believe the 90 Day Trial was over. Further, it could not be proven that the employee had given any undertaking not to raise a personal grievance.

Once it is established the 90 Day Trial is over, or otherwise invalidated, then a termination without cause or process (which is essentially what a 90 Day Trial Period Termination always is) becomes immediately unjustified and in breach of the Employment Relations Act 2000, which entitles a claimant to legal remedies.

The outcome in this case was the employee being awarded nearly $32,000.00 and subsequently the liquidation of Alley Cantina Ltd. Whether or not the ex-employee sees any money remains to be seen.