Using a 90-day trial period in NZ: the rules and the pitfalls

Who can use a 90-day trial period?

From 23 December 2023, all employers can include a 90-day trial period, not just small businesses. Trial periods are governed by sections 67A and 67B of the Employment Relations Act 2000, and can only be used for a genuinely new employee who has not worked for you before.

Accredited employers cannot use a 90-day trial period when hiring someone on an Accredited Employer Work Visa.

The strict requirements

• The trial clause must be in a written employment agreement that is signed before the employee starts work.
• The employee must be given a fair and reasonable opportunity to seek independent advice before signing.
• The clause must be correctly worded, stating that it is a trial period of a specified length (no more than 90 days) and when it starts.
• The employee must not have worked for you previously.
• It must be entered into in good faith.

What a trial period does and does not do

During a valid trial period you can dismiss the employee, and they cannot bring a personal grievance for that dismissal. You must still give the notice set out in the agreement (or reasonable notice) within the 90 days.

A trial period does not remove the employee’s other rights. They are still entitled to correct pay, holidays and a safe workplace, and they can still raise a grievance on other grounds, such as discrimination or harassment, or claim a breach of statutory entitlements.

Common mistakes that invalidate a trial period

• The employee started work (even an induction) before signing the agreement.
• The employee was not given real time or opportunity to seek advice.
• The trial clause is poorly worded or does not state the start date and length.
• The person had worked for the business before, even briefly.