Seven Tips for Getting 90-Day Trial Periods Right

A key change the Government introduced just prior to Christmas 2023 was the reintroduction of 90-day trial periods for all businesses, regardless of size. Any employer, of any size, can now insert a 90-day trial period clause into their employment agreements for new staff.

But as statistics from the Ministry of Business, Innovation and Employment show, there are plenty of employers who get these wrong — 75% of trial periods challenged in the Employment Relations Authority between 2015 and 2023 were found to be invalid.

Here are my top tips for introducing valid trial periods.

1. You Can’t Have a Trial Period for Current or Former Staff

That means you can’t have someone who has worked for you in any capacity subject to a trial period. Even if they worked for you casually in the past. Just don’t go there.

You also can’t have a trial period in an agreement for an employee you’re hiring under the Accredited Employers Work Visa scheme.

2. Your Employment Agreement Must Include the Right Details

The trial period clause in the employment agreement must cover off three things: when the trial period starts and ends (it must be no more than 90 days long), that you can dismiss during the trial period, and that if you dismiss, the employee cannot take any claims against you in respect of their dismissal.

Here is an example clause you could use:

Starting on their first day of work, the Employee will serve a trial period of 90 days.

During the trial period, the Employer may dismiss the Employee by giving one week’s notice in writing (whether or not that notice period concludes during, on, or after the end of the trial period). The Employer may either require the Employee to work out that notice period, or not require the Employee to work out that notice period but pay the Employee what they would have earned for working that period.

If the Employer gives notice to dismiss the Employee during the trial period, the Employee will not be entitled to bring a personal grievance or other legal proceedings in respect of that dismissal.

3. The Trial Period Must Be 90 Days or Less

It sort of goes without saying that the 90-day trial period must be 90 days or less. But there have been cases where employers believed that specifying “three months” instead of “90 days” was okay. That’s a risky move.

There’s nothing to stop you from having a trial period of less than 90 days if you like. But, why would you?

4. The Agreement Must Be Given to the Employee for Review

The employee must have a fair opportunity to review the agreement containing the trial period clause before they sign it. In handing it over, you need to tell them they are entitled to get independent advice on the agreement and then give them a fair chance to get that advice.

If you don’t do this, there is a risk that the employee could later say that you forced them into signing the agreement containing the trial period clause. In some cases, that can mean the trial period clause is deleted from the agreement.

I recommend employers ensure that the employee has a week before they are asked to sign and return the agreement to ensure this is not a factor.

5. The Agreement Must Be Signed Before Work Starts

After all these years of having trial periods in place, I still see some employers not bothering to have the employment agreement signed by the employee until the employee’s first day of work. That’s a big no-no.

You can’t have a trial period clause in an employment agreement with someone who is already your employee. And if someone comes to work for you before signing the agreement — even if they work for just a single hour — then technically they are already your employee and can’t be subject to a trial period.

The takeaway: make sure that the agreement is signed at least a day before the employee is due to turn up and start work. Better still, make it a condition of accepting the offer of employment that they return the signed agreement to you before they are due to start.

6. Diarise an 80-Day Review

Put a note in your calendar for 80 days after they have started to remind you to consider whether you still want to have this employee on your books. This is important to ensure that you don’t miss the 90-day expiry. Once that date is passed, you can’t rely on the trial period.

7. You Must Still Treat the Employee Fairly

Though claims about their dismissal are outlawed, an employee can still bring a claim against you for other things, like discrimination or other unfairness during their employment if you dismiss them under a trial period.

And you still have an obligation to act in good faith towards them, which means if they ask for the reason for their dismissal, you should tell them.