90 Day Trial Period Or Probationary Period – Where Do You Stand?

19 November, 2019 | Carolyn Ranson

From 6 May 2019 the Government introduced changes to NZ Employment Law, meaning some employers can no longer use trial periods for new employees.  The law relating to probationary periods remains unchanged.

Employers value the ability to evaluate a new employee for suitability for the role on a trial basis before confirming permanent employment. This ability often means employees are employed, when they might not otherwise be, because the risk to the employer of employing someone unsuitable is lowered.  It is therefore important for both employers and employees to know how the new law might affect them.

This article explains when an employer can and can’t use a trial period and how a probationary period works.

Trial Periods – What has changed and what has stayed the same?
If the business employs 20 employees or over then;

• Trial periods contained in Employment Agreements entered into before 6 May 2019 will continue to have effect.
• Employment Agreements entered into from 6 May 2019 will no longer be able to contain a trial period clause but can contain a probationary period clause.

If the business employs 19 employees or less then;

• The law relating to trial periods remains unchanged;
• Employment Agreements can contain a trial period of up to the first 90 days for new employees if agreed by the employee and the Employment Agreement is signed before the employee starts work.
• The employee cannot bring a personal grievance for unjustified dismissal, if the trial period is valid, but may be able to bring other claims unrelated to the dismissal.

Probationary Periods – What are they and how do they work?
If the business employs 20 employees or over then a probationary period can be used if;

• The probationary period clause is correctly worded and contained in the Employment Agreement; and
• The Employment Agreement is signed before the employee starts work.

A probationary period is more restrictive than a trial period.

A probationary period still allows the employer to assess whether or not the employee is suitable for the role but the law relating to unjustified dismissal applies.

A probationary period clause must be specific and be reasonable.

A probationary period clause can be used for existing employees if commencing a new role with their employer in certain circumstances.

The employee can still bring a personal grievance for unjustified dismissal if dismissed under a probationary period clause, if the proper process has not been followed.

If you would like to discuss any matters relating to trial periods, probationary periods or any other employment related matter, please contact our employment law team on 836 0939 or email carolyn.ranson@smithpartners.co.nz