90 Day Trials

New Zealand’s 90-day trial period law has recently changed in a way that affects both small and large employers, and it’s easy to get confused about what now applies.

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Under the old rules, only employers with fewer than 20 employees could use a 90-day trial period. Larger employers were simply not allowed to include a valid trial period clause in new employment agreements. A trial period is a clause for a brand-new employee (someone who has never worked for that employer before) that allows the employer to dismiss them within the first 90 calendar days without the employee being able to bring a personal grievance for unjustified dismissal.

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The Employment Relations (Trial Periods) Amendment Act 2023** changed this position. From 23 December 2023, businesses of any size can now use a 90-day trial period for new employees. In other words, a small local retailer and a large national corporation now have the same legal ability to agree to a trial period, provided all the technical requirements are met.
 

Those technical requirements still matter a great deal. The trial clause must be in a written employment agreement, agreed and signed before the employee starts work. The employee must be genuinely “new” to that employer. Any dismissal relying on the trial must occur within the 90-day period, and the employer should clearly communicate that it is acting under the trial clause. If those steps aren’t followed properly, the trial period can be held invalid and the employee may regain the right to challenge the dismissal.
 

It’s also important to understand what the trial period does not do. It does not block all personal grievances. Employees can still bring grievances about discrimination, harassment, bullying, unjustified disadvantage, or other unlawful conduct. The protection is only against claims that the dismissal itself was unjustified, where there is a valid trial in place.

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There is a major immigration-related exception. Accredited employers cannot use 90-day trial periods for workers employed on an Accredited Employer Work Visa (AEWV). Doing so breaches immigration rules and can threaten the employer’s accreditation. In practice, this means accredited employers must run a lawful performance and probation process for AEWV employees, rather than relying on a trial period.