Getting the 90 Day Trial Period Right

by | 29 Jul 2020 | Employment, Litigation

If you are a business owner, employees are your most important resources.  Therefore, hiring the right people is crucial for a successful business, but getting it wrong can have serious consequences.

The Employment Relations Act allows small businesses with 19 people or less to use a 90 days trial period to assess new employees.

If the new employee is found to be unsuitable within the 90 days, then the small business owner is allowed to dismiss that employee without having to follow a lengthy performance management process or to give any reasons for the dismissal.

However, in order to rely on the 90 days trial period, you must make sure the employment agreement sets out the following terms very clearly:

  1. That the trial period is for 90 days starting from the first day of employment;
  2. During the trial period, the employer may dismiss the employee;
  3. The minimum notice period to be given to the employee must be specified; and
  4. That the employee is not permitted to bring a personal grievance against the employer with respect to that dismissal.

If the employment agreement is not clear on any of the above, then the 90 days trial period will not be available to the employer.  In our experience, the Employment Relations Authority is not very accommodating with respect to defects in the employment agreement, so it is very important to get the wording perfect.

In addition, you must ensure the employee signs an employment agreement containing the trial clause before they step into the office on the first day of work.

In a recent case, an employee signed the employment contract 1 hour after he commenced work on the first day.  The Authority determined that the employer could not rely on the 90 days trial period to dismiss the employee because he signed the contract after he already started work.

If you have any questions about employment contracts, speak to us at Capstone Law, and we would be happy to assist you.

Kenneth Sun

Kenneth Sun

Partner & CEO

Kenneth is the founding partner of Capstone Law.  Kenneth has a MPhil from the University of Cambridge, and he was also awarded the prestigious Dean’s Academic Achievement Award for graduating from the University of Auckland law school in the top 5% of his class. Kenneth has worked at some of the best law firms in the country before starting Capstone Law.


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