UPDATE: Since May 2019, trial periods are only permitted for employers with 19 or less employees. Employers with 20 or more employees may instead use probationary periods, although these do not offer protection from personal grievances for unjustified dismissals, as trial periods do.
Trial periods have been part of New Zealand's employment law since 2009 under section 67A of the Employment Relations Act 2000. They are a valuable asset for employers who need some assurance that the employee they are hiring can do the job and is a suitable person for their organisation. However, basic mistakes are still being made by many employers when taking advantage of them. Firstly, the trial period needs to be agreed by the employee BEFORE starting work, in other words, the fact that there will be one needs to be stated at the time of the job offer, or have it in an employment agreement that is signed before the employee begins work. Secondly, the wording of the clause must include certain information to be valid. It has to specifically mention that, if dismissed within the trial period, the employee cannot pursue a claim of unjustified dismissal. It also needs to state how long the trial period is for. The law allows up to ninety days, but an employer may wish to make the period, say, thirty or sixty days. This is permissible as long as the actual time frame is mentioned.
Another error commonly made is in the matter of termination. Some employers do not realise that if a specific notice period or wages in lieu of notice provision is not included in the trial period clause, then the termination clause that will be elsewhere in the agreement must be adhered to. Thus, if an employer's termination period for employees is normally two weeks, then two weeks must also be given to an employee who is being dismissed within the trial period. However, if the employer wishes to make that a shorter time, or pay wages in lieu of notice, then that must be stated in the trial period clause. Some employers mistakenly believe that they can give instant dismissal within the trial period, but this is not correct.
Employers understand that a reason for dismissal is not required within a trial period. However, even though section 67A does not mention anything about providing training and support during it, the Employment Relations Authority and Employment Court have laid down in case law that an employer must take into account its good faith requirement and do just that. This is only fair. An employee in the trial period does not have all the same rights as those outside one, therefore the Authority and Court wish to ensure that every chance is given to the employee to succeed.
Finally, trial periods are only permitted for new employees. If someone has worked at the organisation previously, even on a casual basis, they cannot be subject to a trial period.
Posted: Fri 07 Apr 2017