The Ins and Outs of the 90-Day Trial: What Employers Need to Know Post-Amendment

On 21 December 2023, the Employment Relations (Trial Periods) Amendment Bill was passed by the Coalition Government under urgency.

The primary change the Bill introduces is extending the ability for all employers to include a 90-day trial period in employment agreements with new employees. This changes the 90-day trial period that was only available for employers with 20 or fewer employees. Now all employers irrelevant of staffing numbers can have a trial period.

But there is a catch….the rules for dismissing an employee on a trial period remain in place. So, the employment agreement must contain a 90-day trial period clause, and it must be presented to the employee and signed by them before starting their first day.

The Ministry of Business Innovation and Employment stressed the strict approach taken by the Employment Relations Authority and the Employment Court in determining whether employers have complied with the Act when dismissing an employee under a 90 day trial.

Reasons employers get it wrong:

  • An employment contract failure. Failure to get it signed by the employee. There is no trial period in the employment agreement.
  • The employee is given the employment contract after starting. Or was previously employed by the business.
  • The trial provision itself was incorrectly drafted.
  • Notice of dismissal was not correctly given.

So how do you avoid these errors when dismissing an employee during the notice period.

  • Have a contract that is professionally done and reviewed regularly.
  • Provide your offer of employment and have it emailed or handed back to you before the employee starts work, not on the same day they start.
  • If the employer wants to terminate the 90 day trial period it must be done correctly, notice must be given and the employee should be allowed to work the notice period or agree to be paid in lieu.
  • Comply with the terms of the 90-day trial.

But the best option is to talk to us before you dismiss an employee under the 90 day trial.