Managing 90-day Trials

90-day trials

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:

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.
If you verbally offer a role to a new employee, we recommend advising that there is a trial period included in the employment agreement and that acceptance is subject to signing the written employment agreement that contains other terms and conditions.

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. It must be the amount of notice in the employment agreement.
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

No. A probationary period is very different from a trial period, and must be handled differently. Before considering termination of employment under a probationary clause, an employer must follow a full and fair process, which should include:

Regular meetings to give feedback and coaching.
Highlighting and discussing any issues as they arise (then file noting them)
Giving the employee plenty of opportunity to improve, prior to considering termination of employment under this clause.

A probation period can only be for a length of time that is agreed in the employment agreement, generally begins at the start of employment, and can be for any reasonable period so that you can assess the employees suitability to the role.

No. If an employee is a union member employed on a collective employment agreement, they can’t have a trial period (in their individual terms and conditions) inconsistent with the collective employment agreement. For example, if the collective employment agreement states that an employee can’t be employed on a trial period, then they can’t have a trial period in their individual terms.

A trial period must be agreed to in the employment agreement before the employee commences work. To avoid a potential unjustifiable dismissal, ensure that you receive the signed agreement (which includes the trial period) at least a day before they commence work, not the morning they start their employment.

The employer doesn’t have to give reasons for a dismissal during a trial period or give the employee a chance to comment before the dismissal. We recommend only giving a reason if asked by the employee.

Yes. The notice must be given within the 90-calendar day trial, but the notice period is allowed to fall outside of the 90 days.

Yes. A personal grievance can still be raised 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 some valid reasons an employee may raise a personal grievance.

No. You are not allowed to use a 90-day trial period for employees who are on a Accredited Employer Work Visa (AEWV).

No. You can not decide to pay the employee in lieu of notice. You need to give the employee the option to work out the notice period or not.

All Retail NZ employment contract templates contain a compliant 90-day trial clause. They can be found here.

Please get in touch with our Advice Service on 0800 472 472 (1800 128 086 from Australia) or email [email protected], for templates, questions and guidance on dismissing using the 90 day trial clause.

Updated January 2024.

TagsEmployment Law