A 90-day trial can be a great tool to ensure a new employee has the right skills and attitude and is going to be a good fit for your business, but if managed incorrectly and the trial is deemed invalid, it can land you in hot water by giving your employee the ability to raise a personal grievance for unjustified dismissal.
The average amount awarded for unjustified dismissal in 2022 was around $15,000, but several serious breaches were over $25,000. Its important to get it right from the start to avoid these penalties!
Here’s what you need to get right, to ensure your trial period is valid:
- At the time of offering employment, you must employee less than 20 people (note you must include all casual, part-time, permanent and fixed-term employees in your calculation, contractors don’t count towards the total). Staff numbers can fluctuate, but provided you have under 20 the day your new employee starts, the trial period will still be valid.
- The employee must be a brand-new employee and have not worked for the employer previously, in any capacity.
- The 90-day trial period begins the day your employee commences work and can be for up to 90 calendar days.
- The trial period clause must comply with the requirements of Sections 67A and 67B of the Employment Relations Act 2000. This requires the employment agreement must specify when the trial period commences and how long the trial period will be for.
- The employment agreement containing the trial period clause must be agreed to and signed by both parties before the new employee commences work. Ensure that you receive the signed agreement at least a day before they commence work, not the morning they start their employment.
- The employee must be given reasonable time to review their contract and seek independent legal advice if they want to, prior to signing.
During the 90-day period an employer can dismiss an employee if they are not right for the role.
- The employer must give the employee the appropriate written notice within the trial period, even if their last day of employment falls outside of the trial period.
- The employer does not have to give reasons for the dismissal, however if the employer is asked, they should provide an explanation, in order to meet good faith obligations.
- A personal grievance can still be brought by an employee on a trial period on any other matter except their dismissal. For example, allegations of sexual harassment, pressure regarding union membership, or discrimination are still valid reasons for an employee to raise a personal grievance.
Frequently Asked Questions
All Retail NZ employment contract templates contain a compliant 90-day trial clause. They can be found here.
If you have any questions or would like help managing a 90-day trial, get in touch with our Advice Service on 0800 472 472 (1800 128 086 from Australia) or email [email protected].