08 Jun 2023

90 day trial periods

Trial periods are designed to give a measure of support to owners of small businesses when taking on a new, unknown employee. The intention is to encourage business owners to consider taking a risk in employing someone who has never worked for them before, and to give a new employee three months to prove themself. Within a valid 90 day Trial Period, the business owner can take a less-onerous process to end the employment if it is not working out, and the employee is not entitled to take a personal grievance on the grounds of unjustified dismissal.



As you will be aware, New Zealand employment law is very strongly protective of employees, and this also applies to 90 Day Trial Periods. Here is a beginner’s guide to 90 Day Trial Periods:


• Count how many employees you have when you are recruiting. If you have 20 or more on the day this next employee starts work, this article is not for you. You cannot use a 90 Day Trial Period.


• They are only for people who have NEVER worked for you before, in any capacity. So not for someone who has worked for you as a casual employee, or someone who has been paid for a day of work to test them out, or someone who worked for you three years ago in a different role, or any similar situation.


• Before you make an offer to anyone, make sure you have a written Individual Employment Agreement, with a valid Trial Period clause in it. We can help with the wording.


• Tell the candidate about the Trial Period in the interview, and in the email you send with the Individual Employment Agreement. If you use a Letter of Offer, make sure it talks about the 90 Day Trial Period.


• Make the offer of employment AT LEAST a week before the day you want them to start work, (and send them the Agreement the same day!) . You have to give them time to read the Agreement and seek advice. It is NOT ok to send it on Friday afternoon and ask them to start work on Monday. If they don’t confirm they have received the Agreement, ring them up and check, and remind them that they need to sign it and return it before they start work.


• THEY MUST SIGN THE AGREEMENT BEFORE THEY START WORK. If they start work, and then sign the agreement, the Trial Period is not valid.



As you can see, there is a bit of work to do before your new employee starts. It is not hard, you just need to make sure it all happens, and that you can prove it later if required.


Once the employee starts, it is in everyone’s best interest that you genuinely give them all the support they need to succeed. If anything is not working, talk with them and give them a chance to improve. If it is really not working, go through the above list before considering termination under the 90 Day Trial Period.



If you are certain it is a valid 90 Day Trial Period, get a second opinion to confirm (call us!), then proceed as follows:


• While it is not specifically legally required, it is definitely best to ensure you have raised the issue(s) with the employee and given them an opportunity to improve. Keep notes associated with any meetings, which could be a follow-up email to the employee, or screen shot of a message outlining what you have asked them to improve.


• If it is still not working out, have a meeting with the employee in a private space, explain the situation, and that you have decided to end their employment under the 90 Day Trial Period. Explain what the notice period is, and that you will pay them for that notice period and not require them to work (if the employment agreement allows that). You could ask them to work out their notice period, but don’t expect that to be a pleasant experience!


• Follow this up in writing with a carefully worded letter.




If there is any risk that it is not a valid Trial Period, we can help you through a process to assess whether the employee is capable of stepping up or needs to step out, in a way that meets legal requirements.


Just so you are aware, even if you follow every step outlined above, you might receive a Personal Grievance because some advocates have come to expect that any PG letter will result in a payout, even if it has no merit. If this happens, seek advice. We can support you through the process.


Remember, you are not alone as a business owner, we are here to support you through all the joys and challenges of employing staff.


Meredith MacKenzie | People & Culture Specialist