In December 2023, the recently elected National Government reintroduced 90 day trial periods into New Zealand employment legislation. Many small business employers believe this means they can terminate a new employee within the first 90 days without reason. But…………………..there are a few things to keep in mind.
While an employee cannot raise a personal grievance in respect of a termination under a valid trial period, this does not mean an employee cannot bring a claim under any circumstances. A valid trial period must:
· be agreed to in the employment agreement before the employee starts work, or the trial period is invalid
· have a valid notice period in the employment contract
· be agreed by the employer and employee in good faith – an employee can’t be forced into being employed on a trial period
· be in the employment agreement and must state that:
from the very start of their employment, the employee will be on a trial for a set period which isn’t more than 90 days (but can be less). The exact time period must be stated, for example, it could be 30 days, or 90 days, or another stated time period; and
during the trial, the employer can dismiss the employee, and
the employee can’t bring a personal grievance or other legal proceedings about their dismissal.
It is also important to note that an employer cannot use a 90 day trial period for an employee that has previously been employed by them.
Case law has also established that while an employer is not required to give an explanation when dismissing an employee under a valid trial period, it is not entitled to refuse to give an explanation on request. Nor is an employer entitled to give an explanation that is misleading or deceptive, or that may tend to mislead or deceive the employee. Employers also need to ensure that if they are intending to make a payment in lieu of notice that this is permitted by the employee’s employment agreement before doing so.
The key message here is that if employers are wanting to use a 90 day trial period, it is essential they get it right and follow the criteria outlined above.
