Our members in regional centres with shallow employment pools tell us this is an important tool for them when they decide to take a chance on someone coming back to the workforce or entering it for the first time. It’s also helpful for those who may have a difficult past but are trying to get back into work.
When the trials were dropped in 2018, almost 50% of our members surveyed said reinstatement of the 90-day trial was their highest priority.
Any initiative that supports those on the edge of the employment market back into work is welcome.
Extending the trials so they are available to all employers was also important because less than a third of New Zealand workers are employed by businesses with fewer than 20 staff. Almost half of New Zealanders work for companies that employ more than 100 people.
Since they were reinstated, we’ve been surprised by the number of larger businesses inquiring to our EMA AdviceLine about using the trial period. Our previous experience suggested they had been used more by smaller businesses.
The trials also strike an appropriate balance because they are subject to strict rules to ensure employees are protected.
As the EMA underlined to its members, it is important that businesses get the process right to avoid an uncomfortable date with the Employment Relations Authority (ERA). When it comes to trial periods, both the Employment Court and the ERA take a strict approach when determining whether employers have complied with the parliamentary act.
In fact, statistics from the Ministry of Business, Innovation and Employment (MBIE) show that between 2015 and 2023, 75% of all 90-day trial provisions that were challenged in the ERA were found to be invalid. This was largely because employers did not meet the necessary procedural requirements.
So, what are the rules when using a 90-day trial period when employing someone new?
First, you can only use a trial period for new employees. Trials cannot be used if an employee is already working for you or if you have previously employed them.
Second, if you are employing someone subject to a 90-day trial, you need to write it into the employment agreement. Note that you will need to specify the length of the trial in days, which can be up to a maximum of 90 calendar days.
Be sure to draw the employee’s attention to the trial clause contained and let them know of their right to seek independent advice. You need to ensure you allow reasonable time for them to consider the offer and obtain this advice.
Critically, for a trial to be valid, the employee must sign the agreement and return it before they start work. This is important, because if they start work before signing their employment agreement, the trial period will likely be considered invalid by the ERA.
For an alternative view: Shaneel Lal: Government tampering with the rights of employees with 90-day trials
Finally, you need to include a notice period in the employment agreement. Remember that this notice period applies during the trial period.
It is also important to understand that all other employment law applies.
For example, all employees are protected from harassment, discrimination or unjustified disadvantage, and are eligible for all other minimum entitlements.
Not meeting these requirements, even if an employee is subject to a trial, may mean they can bring a personal grievance.
You also need to remember that good-faith obligations still apply. That means providing an employee with the necessary training and feedback and a reasonable opportunity to address concerns and improve their performance.
The ERA will likely take a dim view if these good-faith obligations are not met.
Should things not work out and you wish to dismiss an employee under the trial provisions, there is a process you should follow. This includes writing to the employee, going through an engagement process and giving them the opportunity to seek independent advice and to bring a support person.
You will need to notify them of any issues previously discussed, advise them you are intending to terminate under the 90-day trial period, ask for any comments and consider their response.
Finally, if you decide to terminate, you should advise this verbally and follow up in writing to ensure you’ve properly followed any notice requirements. The legislation aims to balance reducing the risk to employers while also providing safeguards for employees.
The EMA provided a lot of guidance to its members through the first half of 2024, as employers began to adopt the new trial periods. The number of calls to the EMA AdviceLine requesting further clarification on 90-day trials was initially quite high, but has since dropped away as businesses gain a greater understanding of the new procedures.
As a general rule, no employer hires someone with a view to letting them go. The 90-trial period has created the right incentive for an employer to give someone a go or a second chance. And that’s something we can get all behind.
