90 DAY TRIALS

90 DAY TRIALS

TRIAL PERIODS FOR ALL EMPLOYERS

On 23 December 2023, the government passed legislation allowing all employers, no matter how many staff they have, to include the 90-day Trial Period provision in their employment agreements. Previously it was only available for those employees with fewer than 20 employees.
While employers might be relieved about this change, the news must be received with caution. Because the Courts view the clause as curtailing the rights of the employee to some extent, they expect the clause to be adhered to in the strictest sense, without any room for alternative interpretation.
It is therefore crucial that (a) the wording in the clause is precise and (b) it is implemented exactly according to strict rules, otherwise it will be held to be invalid, and the employer won’t be able to rely on it when dismissing an employee within the first 90 days. Avoid personal grievances by following the rules.

Some basic best practice rules:

1. The person cannot have ever worked for you before, in any capacity. Signing the employment agreement after the employee has started work (even 5 minutes) will most likely void the trial period.
2. If you intend to use the 90-day Trial the employment agreement must contain the 90-day Trial clause.
3. The clause’s wording must be precise and must indicate a specific notice period – usually shorter than the general notice period mentioned elsewhere in the agreement. A week or less is normal.
4. The Clause must state the Trial Period begins “from the first day the employee begins work for the employer”.
5. The candidate must be advised that there is a 90-day Trial clause in the agreement; they must be provided with a draft agreement to take away and seek advice; and they must return a copy signed and dated at least one or two days BEFORE they are due to start work.
6. During the Trial period it is best practice for the employee to be told if their performance is not up to standard and given a chance to improve prior to dismissal.
7. The dismissal notice must occur before the 90th day even if the notice period extends beyond Day 90.
8. The employee’s final day of employment will be at the end of the notice period – the employer must not pay out notice “in lieu”. You may however ask the employee not to attend work during the notice period.
9. Do not include a Probationary Period and a Trial Period clause in the same agreement. This will probably result in both being void.
10. The Trial Period cannot be extended and cannot be longer than 90 calendar days. It can be shorter but cannot be longer.

If you follow the rules precisely, the 90-day Trial clause does allow you to try out potential employees and dismiss them without having to worry about a personal grievance claim for unjustified dismissal.

If in any doubt, please call us for advice. 09 4300113 or email advice@employerservices.co.nz