90 day Trial Periods – a refresher

 

Since 23 December 2023, all employers in Aotearoa New Zealand have been able to utilise 90 day trial periods clauses for new employees (unless there is a Collective Agreement saying otherwise). 

While a useful option for many employers, we are seeing some “come unstuck” as a result of not understanding the many and varied ways in which trial period clauses, and therefore associated terminations, can be found to be invalid and unjustified.

With that in mind, now seems as a good a time as any to provide a refresher on some (not all) of the key considerations in drafting the clauses, the recruitment phase when a 90 day trial period is in play, and the employment relationship itself.   This article is not a one-stop shop – instead we are covering the most common issues we are still/currently seeing come up in the 90 day trial period world.

 

Red flags we are still seeing:

  1. We often have employers tell us they have made a verbal offer and had acceptance of employment, without reference to, or documentation around, a 90 day trial period. Sometimes this has occurred by way of recruiter assistance.  This is always a red flag – seeking to introduce a 90 day trial period as part of an employment agreement where there has already been offer and acceptance can invalidate the trial period (in the event you ever need to use it).  To be safe, offers of employment should ideally be made via sending the proposed employment agreement to the candidate. 
  2. Getting the clause right matters. “Three month trial periods” are “not a thing” under the Employment Relations Act 2000 and do not offer protection from claims.  There needs to be a start date, and it needs to be accurate.  Reference needs to be made to the fact employees dismissed under the trial period clause cannot bring a personal grievance or other legal proceedings in relation to the dismissal.  We could go on, but the message here is seek appropriate professional advice in drafting this clause (and ideally, the entire employment agreement).
  3. Another common issue is not giving sufficient time between offering the role and the start date for the candidate to take independent advice. Again, this can be a factor that creates risk if you end up wanting to rely on the trial period clause later.
  4. While seemingly a commonly known risk area, we do still hear about employees starting work before signing and returning the employment agreement. Uh oh.  If you need to rely on the trial period to terminate later, this is likely to become an issue.
  5. Assuming the agreement and recruitment phase has gone well, what about the termination itself? Often dismissal will not come as good news, and many employers would prefer to make a payment in lieu of the employee working out their notice.  However, there is some case law pointing to employees being given the opportunity to work out their notice in a trial period dismissal – so, don’t jump the gun.  Remember also, the duty of good faith still applies.

 

Often, these, and other issues arise as a result of pressure to rush someone into a role.  We get it.  But, allowing a few extra days for a solid recruitment and documentation process can be the difference between being able to safely use a 90 day trial period to terminate, or not.

 

Remember, even with a good clause and solid recruitment and documentation process, a 90 day trial period only offers protection from an unjustified dismissal claim (noting we see some employees try to raise the issue anyway).  All other claims remain available.  So, this is not a “get out of jail free” card, and employers and managers should still tread very carefully.

 

For more information

If you or your organisation needs advice on 90 day trial periods or employment law generally, please do not hesitate to reach out.  For more information, please contact 04 472 0020 or one of our employment law experts.

See more of our employment law articles here. 

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90 Day Trial Periods