New Zealand: Employing new staff without the assurance of a trial period

Last Updated: 24 January 2014

If you have recruited staff, you may have employed a new staff member, only to find that their skills and experience are insufficient for the job. Perhaps your star recruit is less than perfect for the role, even though they presented so well in the interview. You may be left questioning your hasty decision to hire, or the genuineness of a referee.

So, it's understandable that a statutory 90 day trial period is an attractive option if you're hiring staff. Employers relying on this trial period can notify staff of their dismissal within 90 days of employment, without facing a personal grievance over their dismissal. However, staff can raise personal grievance claims on other grounds (including discrimination, harassment or unjustified disadvantage), or claim that you have breached your duty of good faith.

Much debate surrounds 90 day trial periods. Are they legally enforceable? Can you dismiss staff on the 91st day? What happens if you haven't told staff that they need to improve?

It is useful to know the legal implications of 90 day trial periods. Keeping to legal requirements can save you from the headache of dealing with personal grievance claims.

While employers of all sizes can rely on trial periods to dismiss new staff, the Courts have made it clear that the criteria around the trial period is strictly applied. There have been many instances of employees successfully claiming that trial periods are invalid. An employee, who had been employed for just one day before signing to the trial period, successfully argued that she was not a new employee. The Court decided that her dismissal under the trial period was unjustified.

We have some trouble-shooting tips for employers:

  1. Only employ 'new' staff on a 90 day trial period. A staff member who has previously worked for your organisation cannot be dismissed under a trial period, even though the role may be new. So, if say, you previously employed someone in the role of Financial Advisor, you cannot rely on a 90 day trial period to dismiss the employee in their new role as General Manager.
  2. The trial period must be in writing and comply with legal requirements. It should say that the employee will serve a trial period for a specified period (of not more than 90 days) from the beginning of the employee's employment, during which time the employer may dismiss the employee; and that the employee is not entitled to bring a personal grievance or other legal proceedings in respect of the dismissal.
  3. Beware setting out any unnecessary obligations for your business in the trial period. For example, do not say that your business will provide the employee with formal training during the trial period, as you will need to comply with these obligations.
  4. Give your new staff member sufficient time to read and sign to their trial period in their employment agreement. It is important that they return the signed employment agreement before starting employment. Otherwise, they could argue that they are not 'new' employees, and that the trial period does not apply.
  5. If you don't think your employee is suitable for your organisation, you should let them know prior to dismissing them. Consult with them about their performance or attitude, and provide an opportunity for improvement. You are legally obliged to be open, honest and communicative with staff. If you fail to deal with performance concerns, your employee could claim unjustified disadvantage and breach of good faith.
  6. You must notify your employee within 90 days (or a shorter timeframe as set out in your trial period) that you intend to dismiss them. It is too late if you have waited until the 91st day. Make sure that you give staff the correct period of notice set out in their employment agreement. You may be able to pay this in lieu.

We recommend that employers seek legal advice before writing or relying on trial periods. Otherwise, your business may be 'on trial'.

Most importantly, take care not to over-rely on trial periods as a part of your recruitment process. You should perform all your usual recruitment techniques (including interviews, psychometric testing and reference checking) before engaging a new staff member. Think of a trial period as a back-stop.

NB: Article was published in Her Magazine

For more information, please contact a member of our Employment Team

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

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