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employment

Can an employer extend a 90-day trial?

Key Takeaway

In New Zealand, a statutory 90-day trial period cannot be extended. It is a strict 90-day maximum from the start of employment. If an employer wishes to dismiss an employee under a trial period, they must do so within these 90 days. After this period, standard employment law protections apply.

Understanding 90-Day Trial Periods in New Zealand

In New Zealand employment law, a 90-day trial period is a specific provision that may be included in an employment agreement for new employees. Its primary purpose is to allow employers to assess a new employee's suitability for a role, with a defined mechanism for termination if the employee is not a good fit. A key characteristic of these trial periods is their strict time limit.

What is a 90-Day Trial Period?

A trial period is a specified period of employment, not exceeding 90 days, during which an employer can dismiss a new employee without that employee being able to bring a personal grievance claim for unjustified dismissal [Source: Employment Relations Act 2000, s 67A(1)]. A 'personal grievance' is a formal complaint an employee can make against their employer regarding an employment matter, such as an unjustified dismissal or unjustified disadvantage [Source: Employment Relations Act 2000, s 103].

For a trial period to be valid, several conditions must be met:

  • It must be in writing [Source: Employment Relations Act 2000, s 67A(1)].
  • It must be agreed to in good faith by the employer and employee [Source: Employment Relations Act 2000, s 67A(1)].
  • It must be for a period of not more than 90 days [Source: Employment Relations Act 2000, s 67A(1)].
  • The employee must be a new employee, meaning they have not previously been employed by the employer [Source: Employment Relations Act 2000, s 67A(2)].
  • The trial period must apply to an employee who commences new employment with an employer on or after 1 July 2011 [Source: Employment Relations Act 2000, s 67A(1A)].

Can an Employer Extend a 90-Day Trial Period?

No, an employer cannot legally extend a statutory 90-day trial period beyond the initial 90-day maximum [Source: Employment Relations Act 2000, s 67A(1)]. The law explicitly states that a trial period must be for 'not more than 90 days.' This period begins on the first day of employment and runs consecutively for 90 calendar days.

If an employer wishes to terminate an employee's employment under the trial period provisions, they must give notice of termination during the 90-day period. The employment can end at any time during or at the expiry of the trial period, provided proper notice is given as per the employment agreement [Source: Employment Relations Act 2000, s 67B(1)].

What Happens After the 90 Days?

If the trial period expires and the employer has not terminated the employment, the employee's employment continues as per the terms of their employment agreement. They are no longer subject to the trial period provisions [Source: Employment Relations Act 2000, s 67A(1)]. This means that any subsequent dismissal would be subject to the standard requirements of justified dismissal under the Employment Relations Act 2000. The employee would then have the right to raise a personal grievance for unjustified dismissal if they believe their dismissal was unfair [Source: Employment Relations Act 2000, s 103].

Alternative Approaches for Employers

If an employer requires a longer assessment period, they cannot do so by extending the 90-day trial period. Instead, they might use alternative approaches such as:

  • Performance Management: Implementing a robust performance management process after the trial period has ended. This involves setting clear expectations, providing regular feedback, offering training or support, and documenting performance issues and improvement plans. Any decision to dismiss based on performance would need to follow a fair process and be substantively justified [Source: Employment Relations Act 2000, s 103A].
  • Fixed-Term Employment Agreements: In some limited circumstances, an employer may offer a fixed-term employment agreement for a specific project or defined period, provided there is a genuine reason for the fixed term [Source: Employment Relations Act 2000, s 66]. However, a trial period can still be included within a fixed-term agreement, but it cannot exceed 90 days and must be within the fixed term [Source: Employment Relations Act 2000, s 67A(1)].

Important Considerations

It is crucial for both employers and employees to understand that the 90-day trial period is a specific legal tool with strict limits. Attempts to circumvent these limits, such as by purporting to 'extend' the trial period, are likely to be invalid and could expose an employer to a personal grievance claim for unjustified dismissal if the employment is terminated after the initial 90 days has passed.

When to Seek Independent Legal Advice

Individuals seeking to understand their specific rights and obligations regarding employment law, including trial periods, are encouraged to consult with an employment lawyer or contact official bodies. Community Law Centres throughout New Zealand offer free legal advice and assistance on a range of legal matters, including employment. This information resource cannot provide legal advice tailored to individual circumstances.

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