What Is the 90-Day Trial Period?
The 90-day trial period is a clause that allows new employees employment to be terminated within their first 90 days of employment without the risk of a personal grievance for unjustified dismissal. It’s intended to give employers flexibility while ensuring new hires are a good fit.
Under the Employment Relations (Trial Periods) Amendment Act 2023, as of 23 December 2023, all employers in New Zealand, regardless of size, can lawfully include a 90-day trial period in individual employment agreements. This change removes the previous restriction that limited its use to employers with fewer than 20 employees.
This is a key change for businesses. If you’re unsure whether your agreements are up to standard, our HR Compliance Services can help.
Common Myths, Busted
Let’s set the record straight on a few persistent misunderstandings:
MYTH 1: Trial periods are only for small businesses
Truth: Not anymore. As of December 2023, any employer, large or small, can use a valid 90-day trial period clause, as long as it’s legally compliant.
MYTH 2: You don’t need to give a reason for termination
Truth: While an employee whose employment has been terminated under this clause can’t bring a personal grievance for unjustified dismissal, they can still claim for discrimination, harassment, or unjustified disadvantage. It’s important to still communicate clearly the reasons it’s not working out with the employee, being vague or dismissive invites risk of someone potentially feeling that they were terminated on the grounds of discrimination. You can minimise the risk of this materially by outlining clearly why it wasn’t working. Not to mention it’s a more human approach, how would you feel if you were terminated with no context. A respectful, documented process still matters.
MYTH 3: You can use a trial period if the employee has worked casually before
Truth: Incorrect. Trial periods only apply to new employees who haven’t previously worked for you – casually, fixed-term, or otherwise.
Getting It Right: Legal Requirements
To be enforceable, a trial period clause must:
- Be in writing
- Be agreed and signed before the employee starts (not the morning they show up for day 1)
- Specify the exact trial period (up to 90 days)
- Clearly state the employee can’t bring a personal grievance for unjustified dismissal
If your employment agreements don’t meet these conditions, the clause may not protect you.
📌 TPP Tip: We recommend reviewing your employment agreements annually to ensure compliance with current legislation. If you’re not sure, our HR Compliance services can help.
Good Faith Still Applies
Even with a trial period, you still have obligations to act in good faith:
- Give the employee fair training and support
- Raise concerns early and give them an opportunity to improve
- Provide written notice of termination before the 90 days is up
If you don’t follow these steps, the trial period may not protect you from a claim.
Are There Any Changes Coming?
The Employment Relations (Trial Periods) Amendment Act 2023 came into force on 23 December 2023, restoring the right for all employers to use 90-day trial periods. There are currently no further changes announced, but it’s wise to keep an eye on updates from Employment New Zealand and MBIE.
Practical Advice for Employers
- Use a compliant clause: Not all templates are created equal. Get your agreements reviewed.
- Communicate expectations early: Set clear performance standards from Day 1.
- Keep a paper trail: Document training, performance discussions, and feedback.
- Don’t wait till Day 89: Termination must occur within the 90 days, not after. Always allow enough time to give notice.
These steps are part of your broader HR compliance.
Need Help Navigating the Fine Print?
Trial periods can be tricky. Whether you’re onboarding a new team member or updating your employment agreements, we can help ensure everything’s compliant and clear.
Check out our Outsourced HR and Employment Relations services or get in touch for tailored advice.