90 Day Trial Periods: Frequently asked questions

Published 13 February 2024

Foundational rules and laws governing 90-day trial periods in New Zealand

New Zealand has recently made a significant adjustment that impacts employers across the nation. Effective from 23rd December 2023, all employers, regardless of size, now have access to 90-day trial periods for new employees. This alteration brings about both opportunities and challenges, particularly for SME managers, leaders, and HR.

How does this change affect existing employment relationships?

The extension of 90-day trial periods in New Zealand affects existing employment relationships in several ways. Firstly, employers previously limited to employing fewer than 20 individuals now have the opportunity to utilise these trial periods, expanding their options during the hiring process. For employees, especially those transitioning between roles or seeking new employment opportunities, this change signifies a broader scope of potential employers offering trial periods as part of their employment agreements.

Furthermore, existing employees may also be affected indirectly as businesses adapt their recruitment strategies to incorporate 90-day trial periods. While these changes do not directly impact current employees' terms of employment, they reflect broader shifts in hiring practices across industries, potentially influencing future job opportunities and workplace dynamics.

The expansion of the 90-day trial period, previously exclusive to companies with fewer than 20 employees, may stir differing opinions among employers and employees alike. While some may welcome the flexibility it offers in assessing potential hires, others may express concerns about potential misuse or unfair employment practices.

Understanding the nuances and guidelines surrounding the extended trial period is crucial for employers navigating New Zealand's employment landscape. Let's delve deeper into the NZ regulations.

Key regulations and responsibilities for employers during the trial period

Agreement in Writing:
Before commencing work, employers and employees must agree in writing to a trial period as part of the employment agreement. Good faith is essential throughout this process.

Duration: The trial period can last up to 90 calendar days from the start of employment. It must be clearly stated in the employment agreement and cannot exceed the specified duration.

Notice Period: A valid trial period must include a notice period in the employment contract. The employer must give notice to the employee before the end of the trial period if termination is intended.

Applicability: Trial periods are available for all industries and job roles within New Zealand. However, certain immigration requirements may affect their use for employees on specific work visas.

Protection and Grievances: During the trial period, in the majority of cases, employees cannot bring a personal grievance for unjustified dismissal. However, the 90-day trial period clause cannot be a 'get out of jail free card' for incorrectly managing an HR matter such as bullying, disagreements, discrimination etc.

Union Members: Employees covered by collective employment agreements may not have trial periods inconsistent with the terms of the collective agreement.

If an employee is on a trial period, they can still raise personal grievances on various grounds other than dismissal.

Ineligibility for Trial Periods

If an employee has worked for the employer before, they cannot be subjected to a trial period. However, probationary periods may be an alternative.

Termination Procedures

Employers must give notice of dismissal within the trial period, adhering to the notice period stated in the employment agreement. While reasons for dismissal are not mandatory, good practice suggests transparent communication.
The extension of 90-day trial periods underscores the importance of fostering constructive employer-employee relationships grounded in fairness and good faith. Employers are encouraged to approach trial periods with diligence and adherence to legal obligations.

In the words of MyHR, ensuring the efficacy of trial periods involves robust recruitment processes, comprehensive onboarding, and clear communication regarding expectations and performance improvement. Terminations, if necessary, should be conducted with sensitivity and adherence to due process.

As New Zealand embraces these regulatory changes, businesses of all sizes are reminded of the reciprocal responsibilities inherent in the employment relationship. Mutual respect, integrity, and a commitment to fairness underpin the foundation of productive workplaces nationwide.

This article is not intended as legal advice but is intended to alert employers to relevant topics of interest and how to be prepared.

Note: This information is based on official details from Employment New Zealand and is subject to change. Always refer to the latest guidelines for the most accurate information. Visit Employment New Zealand here.