90 Day trial period

All the duties of good faith apply during 90 Day Trial Periods. That means employees entering into a 90 Day Trial Period NZ has legalised can bring a grievance against an employer if they are unjustly treated.

You must get the employee to sign the agreement(which has a 90 day trial period) prior to the employee starting.  So get the employee to pick up the new agreement and return it signed before they start.

We strongly recommend that you phone or email us before you rely on this clause.

90 Day Trial Period

A 90 day trial period came into effect on the 1st of March 2009.

As with all legislation, there are key things you need to know before the employment relationship is terminated.

  • Any trial period is voluntary and must be agreed upon by the employer and the employee in writing as part of the employment agreement before employment is started.
  • The trial period provision must be stated in the employment agreement and be no more than 90 days.
  • The trial can only apply to new staff – previous employees or those transferring from one job to another can’t be included.
  • A trial period can only apply once and can’t be rolled over.
  • If dismissed during the trial period, an employee can’t pursue a personal grievance for unjustified dismissal, but can for a disadvantage claim.
  • The employment agreement must be signed prior to the employment starting.

When the 90-day period is correctly used, an employer may dismiss an employee within the period without fear of a claim of unjustified dismissal. The first decision on the 90-day trial period, Smith v Stokes Valley Pharmacy (2009) Limited, demonstrates that an employer must comply strictly with the provisions of the legislation. Under s67A of the Employment Relations Act, trial periods can only apply to a person who has not previously been employed by the employer. 

The first decision on the 90-day trial period, Smith v Stokes Valley Pharmacy (2009) Limited. In this case Mrs Smith was working for Stokes Valley Pharmacy when it was sold.

Mrs Smith was offered a job with the new employer and on 1 October 2009 commenced work for them. On 2 October 2009, she signed a new employment agreement that contained a 90-day trial period. The new employer notified  Mrs Smith that they were unhappy with her performance, and decided to rely on the trial period and terminated her employment in December 2009.

Section 67A of the Employment Relations Act provides that trial periods can only apply to a person who has not previously been employed by the employer. When Mrs Smith signed her employment agreement on 2 October she had already commenced work, even if it was only for very short period (1 day). Stokes Valley Pharmacy (2009) Limited claimed that Mrs Smith had by her discussions accepted the terms and conditions of the draft employment agreement that was provided to her earlier on.

The Court rejected this argument.  There have now been several other decisions confirming this stance.

The Court has provided that any employer wanting to rely on a trial period the employer must be able to demonstrate that it provided its prospective employee with a copy of the intended individual employment agreement, which included the trial period with all the required components outlined under section 67. So how should an employer deal with this? Well the employer must be able to demonstrate the following.

  • That any offer of employment is subject to a trial period.
  • The prospective employee is given a copy of the intended individual employment agreement.
  • Was given an opportunity to seek advice before signing.
  • That the employee was not been employed previously.
  • The employment agreement is signed before the employment starts.
  • That the employment agreement contains a trial period and is in writing.

If the employer fails to up hold this strict process the dismissal could be unlawful. A 90 day trial period limits an employee’s right and therefore an Employment Relations Authority or Employment Court will require an employer to demonstrate that it acted in good faith at the highest level.

Following the termination of employment, NZ permits under a 90-day trial, employees can still bring personal grievances for unjustified disadvantage, discrimination, sexual or racial harassment, duress, and failure by an employer to comply with the continuity of employment provisions in the Employment Relations Act. There are very strict requirements to follow on how to dismiss under the 90-day trial so always best to seek advice.

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