Since December 2023, the 90-day trial period has been available to all employers, regardless of the size of their workforce.
Sarah Lim
When used correctly, this clause is a powerful tool, boosting an employer’s confidence in hiring. It allows them to assess a new employee’s suitability and capability without the pressure of following a comprehensive process to end the employment if the person turns out not to be the right fit.
At the EMA, our AdviceLine fields around 500 calls each week from employers across New Zealand, and the trial period clause continues to feature regularly in member queries. The clause prevents an employee from raising a personal grievance for unjustified dismissal within 90 days.
However, if the employer fails to ensure the clause is valid, enforceable, and correctly applied, terminating employment under the trial period can become a costly mistake.
For example, in the recent case Singh v Pilling & Leggett Engineering Co Ltd, an employee was awarded $15,000 for hurt and humiliation. The trial period clause in that case did not reference the correct section of the Employment Relations Act 2000, and the employee had not been advised to seek independent advice before signing the employment agreement.
If you’re considering terminating employment under the 90-day trial period clause, keep in mind that four key conditions must be met to ensure the clause is valid and enforceable:
- The offer of employment must include the trial period clause. If there has been a verbal offer and acceptance without reference to the trial period, introducing it later in the written agreement can cause issues.
- The employee must be given sufficient time and opportunity to seek independent advice before signing. A good rule of thumb is at least three to five working days.
- The employee must commence work on the date specified in the agreement. This ensures clarity around when the trial period starts and ends.
- The signed employment agreement must be returned before the employee begins work.
Even if the trial period clause is valid and enforceable, employers must remember they still owe a duty of good faith. The clause does not prevent an employee from raising a personal grievance for unjustified disadvantage. To minimise legal risk, employers should provide a clear explanation for the termination and honour the contractual notice period outlined in the agreement.
- Sarah Lim is senior associate at the Employers and Manufacturers Association (EMA)
