Unpaid Trials and 'Work Tests' in New Zealand Employment Law
In New Zealand, the question of whether an individual must be paid for work performed, even during a trial period or 'work test', is governed by fundamental employment law principles. Generally, if an individual is performing productive work for an employer, an employment relationship exists, and payment at or above the minimum wage is required.
Defining 'Employee' and 'Work'
The Employment Relations Act 2000 (ERA 2000) is the primary legislation governing employment relationships in New Zealand. An 'employee' is defined as any person employed by an employer to do any work for hire or reward under a contract of service [Source: Employment Relations Act 2000, s 6]. The term 'work' is broadly interpreted and includes any activity undertaken for the benefit of an employer.
The General Rule: Payment for Work
If a person is an employee, they are entitled to be paid for all hours worked. This includes any time spent performing duties that directly benefit the employer's business, even if it is labelled as a 'trial' or 'work test'. The Minimum Wage Act 1983 stipulates that all employees aged 16 and over must be paid at least the minimum wage for hours worked [Source: Minimum Wage Act 1983, s 4]. There is no provision in New Zealand law that allows an employer to avoid paying an employee for work performed by calling it an 'unpaid trial'.
Distinguishing Unpaid Trials from Legitimate Assessments
While performing productive work without pay is generally unlawful, a very short, supervised skills assessment that does not involve productive work benefiting the employer might be permissible. This type of assessment focuses solely on evaluating an applicant's abilities in a non-productive environment, for example, a brief practical test to demonstrate a specific skill without generating actual output for the business.
Key factors in determining if an unpaid activity constitutes 'work' include:
- Benefit to the employer: Is the employer receiving a direct or indirect benefit from the individual's activity?
- Productivity: Is the individual performing tasks that an ordinary employee would perform?
- Supervision: Is the individual working largely unsupervised or performing tasks typically performed by an employee?
- Duration: How long is the 'trial' period? Longer periods are more likely to be considered employment.
If any of these factors indicate that the individual is performing productive work, an employment relationship is likely to exist, triggering minimum wage and other entitlements [Source: Employment Relations Act 2000, s 6; Minimum Wage Act 1983, s 4].
90-Day Trial Periods Are Paid
It is important to distinguish unpaid 'work tests' from legitimate 90-day trial periods. A 90-day trial period is a specific arrangement under the Employment Relations Act 2000 that allows an employer with fewer than 20 employees to dismiss a new employee within the first 90 days of employment [Source: Employment Relations Act 2000, s 67A]. Crucially, employees on a 90-day trial period are still fully employed and must be paid for all work performed, receive all statutory entitlements, and their employment agreement must contain the trial period clause [Source: Employment Relations Act 2000, s 67A]. These are paid trial periods, not unpaid.
Volunteers and Interns
- Volunteers: Individuals who volunteer for an organisation do so without the expectation of payment, and the relationship is not considered employment under the ERA 2000 [Source: Employment Relations Act 2000, s 6 (definition of 'employee')]. However, an employer cannot simply label a worker as a 'volunteer' to avoid employment obligations if the work performed is typically done by an employee for commercial gain.
- Interns: Unpaid internships are generally lawful only if they are primarily for the intern's educational benefit and do not involve productive work that would otherwise be done by a paid employee. If an intern is performing productive work that benefits the employer's business, they are likely considered an employee and must be paid at least the minimum wage [Source: Employment Relations Act 2000, s 6; Minimum Wage Act 1983, s 4].
Consequences of Unlawful Unpaid Trials
If an employer requires an individual to undertake an unpaid 'work test' that constitutes productive work, the individual may be able to raise a personal grievance for unpaid wages and other entitlements. The Employment Relations Authority (ERA), which is a specialist body that investigates and resolves employment relationship problems, or the Employment Court, which is a higher court dealing with employment law matters, can order the employer to pay back wages, penalties, and potentially compensation for humiliation, loss of dignity, or injury to feelings [Source: Employment Relations Act 2000, s 103 (personal grievance), s 123 (remedies)].
When to Seek Independent Legal Advice
Individuals who believe they have performed work without payment, or employers unsure about their obligations regarding trials or assessments, should seek independent legal advice. Information and assistance can be obtained from official government bodies such as Employment New Zealand, or through free services provided by Community Law Centres.