Navigating the Trial Period: A Guide for New Zealand Employers and Employees

The New Zealand employment landscape recently saw a significant shift regarding trial periods. As of December 23rd, 2023, all employers can leverage 90-day trial periods when hiring new employees. This change offers benefits for both employers seeking a good fit and employees wanting to showcase their skills. However, navigating trial periods effectively requires understanding the legalities and best practices involved.

What are Trial Periods and How Do They Work?

A trial period, as outlined by Employment New Zealand, is a defined timeframe at the beginning of an employment relationship where both the employer and employee can assess suitability for the role. During this period, the employee enjoys all minimum employment rights (health and safety, minimum pay, holidays, etc.) However, they cannot bring a personal grievance for unjustified dismissal if the employer follows proper work dismissal laws.

Key Components of a Valid Trial Period:

Agreement: The foundation of a valid trial period lies in a written agreement between the employer and employee before work commences. This agreement, included in the employment contract, should clearly state the following:
- The start and end date of the trial period (maximum 90 days).
- The employer’s right to dismiss the employee during the trial period.
- The employee’s inability to bring a personal grievance for unjustified dismissal during the trial period (as long as proper notice is given).

Notice Period: Based on the employment law, the employment agreement must include a valid notice period for dismissal during the trial period. This ensures fairness and protects employee rights. It can be 5 days or 1 week.
Must do this:
The employee must sign the contract and initial the 90 day clause trial prior to starting work.(at least 24 hours for safety).
If they sign it on the start date they are deemed to have worked for the employer prior which negates the 90 day trial.

Benefits of Utilizing Trial Periods:

Reduced Risk for Employers: Trial periods allow employers to assess a new employee’s skills, work ethic, and cultural fit within the organization before committing to a long-term employment relationship. This reduces the risk of a bad hire and associated costs (training, recruitment, etc.).
Improved Fit for Both Parties: Trial periods offer valuable insights for both employers and employees. Employers can determine if the employee possesses the necessary qualities to excel in the role, while employees can evaluate if the position aligns with their expectations and career goals. This can lead to a more informed decision about continuing the employment relationship beyond the trial period.

Important Considerations for Employers:

Transparency: Open communication about expectations, performance benchmarks, and feedback during the trial period is crucial. Regular discussions help employees understand their strengths and areas for improvement, ultimately increasing their chances of success.
Fairness: Trial periods should be implemented in good faith and without pressuring employees into accepting them. Both parties should enter the agreement with a clear understanding of the terms and purpose.
Immigration Requirements: Employers hiring workers on specific visas may need to consider additional immigration regulations concerning trial periods. It’s essential to consult with immigration authorities to ensure compliance with relevant visa conditions.

Considerations for Employees:

Evaluation Opportunity: Trial periods offer employees a chance to showcase their skills and capabilities in a real-world work environment. Utilizing this period to demonstrate initiative, a strong work ethic, and a positive attitude can significantly increase the likelihood of securing a permanent position.
Communication is Key: Open communication with the employer regarding your understanding of the role, expectations, and any concerns is crucial. Seeking feedback throughout the trial period allows you to adapt your approach and showcase your value to the organization.

Trial periods can be a valuable tool for both employers and employees in New Zealand’s dynamic employment landscape. By understanding the legal requirements, best practices, and benefits for both parties, employers and employees can leverage trial periods for a smooth onboarding process and establish a successful long-term working relationship. If you need a lawyer for employee rights or legal employment advice in general, please contact us.