Payment During Notice Under a 90-Day Trial Period in New Zealand
In New Zealand, a 90-day trial period allows employers to assess a new employee's suitability for a role. While it limits an employee's ability to raise a personal grievance for unjustified dismissal, it does not automatically remove the employee's entitlement to payment for a notice period if one is stipulated in their employment agreement.
What is a 90-Day Trial Period?
A 90-day trial period is a specific arrangement allowed under New Zealand employment law that permits an employer to dismiss a new employee within 90 calendar days of their employment commencing, without the employee being able to bring a personal grievance claim for unjustified dismissal [Source: Employment Relations Act 2000, s 67A].
For a 90-day trial period to be valid, the following conditions must be met:
- The trial period must be in writing.
- It must be agreed to by the employee in their employment agreement (the contract between employer and employee) before they start their new employment.
- The employee must not have been previously employed by the employer [Source: Employment Relations Act 2000, s 67B(1)].
- The employer must dismiss the employee during the trial period [Source: Employment Relations Act 2000, s 67D(1)].
Dismissal During a 90-Day Trial Period
If an employer dismisses an employee during a valid 90-day trial period, the employee generally cannot pursue a personal grievance claim solely for unjustified dismissal (a claim that the dismissal was not fair or reasonable) [Source: Employment Relations Act 2000, s 67I(1)]. However, the employee may still bring a personal grievance claim for other reasons, such as unjustified disadvantage, discrimination, or sexual harassment [Source: Employment Relations Act 2000, s 67I(2)].
Entitlement to Payment During a Notice Period
Even when an employee is dismissed under a valid 90-day trial period, the general terms and conditions of their employment agreement, including provisions for a notice period (the amount of time an employer or employee must give before ending employment), still apply. The trial period provisions in the Employment Relations Act 2000 specifically limit an employee's ability to claim unjustified dismissal; they do not negate other contractual entitlements [Source: Employment Relations Act 2000, s 67D(3) implies that other terms of the agreement remain valid].
Therefore, if an employment agreement specifies a notice period for termination, the employee is entitled to be paid for that notice period, even if dismissed under a 90-day trial. This payment may be for working the notice period or as payment in lieu of notice (PILON), where the employee receives payment for the notice period without having to work it, depending on the agreement and the employer's decision.
Additionally, the employer must pay the employee for all work performed up to the date of termination [Source: Wages Protection Act 1983, s 4].
Good Faith Obligations
Both employers and employees have an obligation of good faith towards each other throughout the employment relationship, including during a trial period and the termination process [Source: Employment Relations Act 2000, s 4]. This means they must deal with each other openly, honestly, and without misleading or deceiving.
When to Seek Independent Legal Advice
When a person has questions about their specific employment situation, including the validity of a trial period, dismissal procedures, notice entitlements, or potential personal grievances, seeking independent legal advice is recommended. Employees can contact Employment New Zealand for general information, or for free legal advice, individuals can reach out to a Community Law Centre.