As expected, the new Government has delivered on its promise to remove the ‘small employer’- requirement from the availability of 90-day trial periods. The corresponding law passed under urgency and took effect on 23 December 2023.
This means that businesses of all sizes can now make the employment of new employees subject to a 90-day trial period, during which an employer can terminate an employee’s employment without the termination being able to be challenged by way of a personal grievance. In effect, we are returning to the law as it was before May 2019.
However, things may not be as easy as they seem. Did you know that between 2015 and 2023 approximately a total of 75 per cent (133 out of 178) of all trial period provisions considered during litigation in the Employment Relations Authority were held to be invalid and therefore unenforceable.
With the expected increase in the use of trial periods, this data serves as a strong reminder of the ‘must haves’ when wanting to apply and enforce a 90-day trial period. Things to consider include:
Ensuring that the trial period clause is drafted correctly. These clauses need to be written in a certain way to be enforceable.
Only using trial periods for ‘new employees.
Are persons who have just completed a work trial/work assessment ‘new employees’ for the purposes of the trial period?
Ensuring that the written employment agreement that contains the trial period clause is provided to the employee in advance, so that the employee has a reasonable opportunity to seek independent advice on the agreement and the effect of the trial period.
Ensuring that the written employment agreement that contains the trial period clause is signed by both parties before the employee starts work.
If considering a termination under a trial period clause, ensure that the 90 days are calculated correctly and that the notice of termination is timed correctly.
Whilst a termination may not be challengeable by way of a personal grievance, employees may still raise a personal grievance based on an unjustified disadvantage.
These are just a few things to consider when implementing and enforcing Trial Periods.
Please don’t hesitate to reach out to us at lowdown@cinchhr.co.nz or 0800 CINCH1 (0800 246 241) and utilize our experience and expertise.
Whether you need a compliant clause, a review of your current clause, advice on how to implement and enforce trial periods, or your business perhaps needs advice to properly arrange work trials, if that’s what your business does, without jeopardizing your ability to use and enforce a trial period clause, then get in contact.
Likewise, reach out and have a chat about how else we may assist your business with all matters related to HR and employment law, outsourced consultancy services, or HR software.
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