A 90-day trial period is a specific arrangement within an employment agreement that allows an employer to assess a new employee's suitability for a role over a defined initial period. If the employer decides the employee is not suitable, they can dismiss the employee during this period with specific consequences for personal grievances.
What is a 90-Day Trial Period?
A 90-day trial period is a specified period, not exceeding 90 days, at the start of a new employment relationship. Its key characteristic is that if an employee is dismissed during a valid trial period, they cannot bring a personal grievance (a type of complaint an employee can raise against their employer for specific breaches of employment law, such as unjustified dismissal, discrimination, or sexual harassment [Source: Employment Relations Act 2000, s 103(1)]) for unjustified dismissal [Source: Employment Relations Act 2000, s 67A(1)]. This means the employee cannot claim that their dismissal was unfair or unreasonable.
Eligibility for Using a 90-Day Trial Period
Historically, trial periods were limited to small to medium-sized employers. However, effective 23 December 2023, all employers in New Zealand, regardless of their size, can use 90-day trial periods [Source: Employment Relations (Trial Periods) Amendment Act 2023, s 4, amending s 67A(1) of the Employment Relations Act 2000].
For a trial period to be valid, it must apply to a new employee. A new employee is someone who has not previously been employed by the employer [Source: Employment Relations Act 2000, s 67A(2)]. This means an employer cannot use a trial period for an existing employee moving to a new role within the same organisation.
Requirements for a Valid 90-Day Trial Period
For a 90-day trial period to be legally valid and enforceable, the following conditions must be met:
- Written Agreement: The existence of a trial period must be stated in writing within the employment agreement [Source: Employment Relations Act 2000, s 67A(1)(a)].
- Agreed Before Employment Starts: The employee and employer must agree to the trial period before the employee actually begins their employment [Source: Employment Relations Act 2000, s 67A(1)(b)].
- New Employee: The employee must be a new employee who has not been previously employed by the employer [Source: Employment Relations Act 2000, s 67A(2)].
- Maximum Duration: The trial period must be for a period of 90 days or less [Source: Employment Relations Act 2000, s 67A(1)].
Rights and Obligations During a Trial Period
Employer's Rights and Obligations
An employer may dismiss an employee during a valid trial period. If they do so, they must give the employee notice of termination as specified in the employment agreement [Source: Employment Relations Act 2000, s 67A(1)(c)]. The employer is not required to provide a reason for the dismissal and cannot face a personal grievance claim for unjustified dismissal, provided the trial period is valid.
Employee's Rights and Obligations
While a valid trial period restricts an employee's ability to claim unjustified dismissal, it does not remove all other employment rights. During a trial period, an employee retains all other minimum employment rights, including the right to minimum wage, paid holidays, and a safe working environment. The limitation on personal grievances under a trial period applies specifically to claims of unjustified dismissal [Source: Employment Relations Act 2000, s 67A(1)].
Employees can still bring personal grievance claims for other reasons, such as:
- Discrimination [Source: Employment Relations Act 2000, s 103(1)(b)]
- Sexual harassment [Source: Employment Relations Act 2000, s 103(1)(c)]
- Racial harassment [Source: Employment Relations Act 2000, s 103(1)(d)]
- Duress in relation to membership of a union or an employee organisation [Source: Employment Relations Act 2000, s 103(1)(e)]
- Unjustified disadvantage to the employee's employment [Source: Employment Relations Act 2000, s 103(1)(f)]
Consequences of an Invalid Trial Period
If any of the requirements for a valid 90-day trial period are not met (for example, if the agreement was not in writing, was not agreed before work started, or the employee was not new to the employer), the trial period is invalid. In such cases, if the employee is dismissed, they would be able to bring a personal grievance claim for unjustified dismissal, as if no trial period had existed [Source: Employment Relations Act 2000, s 67A(1)].
When to Seek Independent Legal Advice
If there are questions about the validity or application of a 90-day trial period, the process of dismissal within a trial period, or if an employee believes they have been subject to a personal grievance other than unjustified dismissal during a trial period, independent legal advice should be sought. Guidance can be obtained from organisations such as Community Law Centres or private legal practitioners.
Key Resources
- Employment New Zealand: https://www.employment.govt.nz/
- Legislation New Zealand: https://www.legislation.govt.nz/
- Community Law Centres: https://communitylaw.org.nz/