90-Day Trial Period NZ: The Rules Employers and Employees Need to Know

A 90-day trial period lets an employer dismiss a new employee within their first 90 days without needing a good reason or a fair process, but only if the trial is set up correctly. Since 23 December 2023, any employer can use one, not just small businesses.

This is general information about New Zealand employment law, not legal advice. For your own situation, consult a lawyer or your local Community Law centre.

What a 90-day trial period is

A trial period is a clause in an employment agreement that lets an employer dismiss a new employee at any point in their first 90 calendar days, without the employer needing a good reason for the dismissal and without following the fair process that would otherwise apply. It sits inside the Employment Relations Act 2000 as an exception to the ordinary dismissal rules, and it only works if it is set up exactly the way the law requires.

Available to every employer since December 2023

Trial periods used to be restricted to employers with fewer than 20 employees. The Employment Relations (Trial Periods) Amendment Act 2023 removed that limit, and since 23 December 2023 any employer, regardless of size, has been able to include a trial period in a new employee's agreement. The change did not alter anything else about how a trial period works, including the writing and signing requirements below.

The rules that make a trial period valid

For a trial period to be enforceable, several things all have to be true:

• It must be recorded in writing in the employee's individual employment agreement, stating that the employment starts with a trial period of up to 90 calendar days and that the employer may dismiss the employee during it.
• The employee must sign that agreement before they start any work for the employer, including induction, training, or trial shifts. If work begins before signing, the trial period is not valid, even if the employee signs later the same day.
• It can only apply to someone who has not worked for that employer before. It cannot be used on an existing employee moving to a new role, or on someone who previously worked for the business and has been rehired.
• The employer must give the employee a reasonable opportunity to get independent advice on the agreement before signing.

If any one of these is missing, the trial period clause can be found invalid, which puts the employer back to the ordinary dismissal rules, including the fair and reasonable employer test.

What a valid trial period does, and does not, remove

Where a trial period is valid and the employer dismisses the employee within the 90 days, the employee cannot bring a personal grievance for unjustified dismissal over that dismissal. This is the main practical effect: the employer does not have to justify the reason or show a fair process for that specific dismissal.

A trial period does not switch off every other employment right. The employer still owes ordinary good faith duties, including dealing with the employee honestly and giving whatever notice period the agreement specifies. An employee dismissed during a valid trial can still raise other personal grievances that are not for unjustified dismissal, such as discrimination on a prohibited ground, sexual or racial harassment, or duress connected to union membership. See personal grievances for how those are raised and what the time limits are.

Migrant workers on an Accredited Employer Work Visa

An employer cannot use a 90-day trial period for a migrant employed on an Accredited Employer Work Visa (AEWV). Employment agreements submitted as part of an AEWV job check application must not include a trial period, and including one can put the employer's accreditation at risk.

Common mistakes that invalidate a trial period

The most frequent problem is timing: an employee starts work, even informally, before signing the agreement that contains the trial clause. Other common issues include using a trial period on someone who has worked for the business before, agreements that do not clearly state the 90-day limit or that dismissal is permitted during it, and not giving the employee a chance to get advice before signing. Any of these can mean the trial period does not hold up if the dismissal is later challenged.

Related employment topics

For the general test that applies once a trial period does not apply, or was never valid, see unjustified dismissal. For the wider picture of employment law in New Zealand, see the employment law hub.