The 90 Day Trial Period

What to do and why.

The new law is an amendment to the Employment Relations Act 2000

1. A Trial Period is not automatic for new jobs in small businesses. It only occurs if the employer and employee agree to it.
2. The trial period will need to be in the Employment Agreement.
3. The 90 days is a maximum and it can, by agreement be less.
4. All employment rights such as good faith, non-discrimination, non-harassment, holidays, leave and OSH are maintained during a trial period. If you dismiss an employee for non performance, misconduct, redundancy or another legitimate reason during the trial period then they will not be able to take a personal grievance. If you dismiss someone because they are pregnant (for example), you can have a grievance brought against you.
   
   The termination itself does not have to fall within the 90 day period of the trial period. The employer must give the employee notice of termination within the period. There is no minimum notice period in the legislation, it simply says that the employer must "give the employee notice" – so it appears short or immediate notice of termination will be within the law. Check your agreements on notice.
   
   The amendment only protects employers from unjustified dismissal claims. Employees can still bring personal grievances for sexual or racial harassment unjustified disadvantage, discrimination, duress and failure by an employer to comply with the continuity of employment provisions in the Employment Relations Act or in the Employment Agreement.
5. There can be only one trial period per employee. An employer can not have a trial period for an employee who has worked for them previously.
6. If an employee leaves a benefit (WINZ) to take up a job which is terminated within the 90 day trial period, there is no stand down returning to the benefit.
7. While small businesses (less than 20 staff) make up 97% of enterprises, they only employ 31% of employees.
8. The statement above means the Act will affect employers with 19 or less staff.
9. The law only applies to new employees, and cannot affect any existing employee in their current job.
10. The law is effective from 1st March 2009.
11. Employers can retain the 3 month Probationary Period and insert a Trial Period in their employment agreements with the agreement of the employee.

Probationary Periods (Now)
Probationary Periods have been legally used since the introduction of the Employment Relations Act (2nd Oct 2000) and it is legal to incorporate these in Employment Agreements. Employers of more than 19 employees - who cannot use Trial Periods - are advised to continue to use Probationary Periods in Agreements.

Trial Periods (After 1st March 2009)
The amendment of 2009 will allow Trial Periods (1st March 2009) which offer some protection for employers against Personal Grievances in certain circumstance.

Some Differences
Trial Periods cannot be extended beyond 90 days - Probationary Periods can be extended. Trial Periods are not available to employers of over 19 staff. There can be only one trial period per employee. No trial period is allowable if the employee has worked for that employer before (ever). Trial Periods ban employees from raising personal grievances in certain circumstances (not Human Rights infringements or disadvantage)

For clients who have just put 'employment agreements' in place (after March 1st) without a Trial Period but want one, please go to www.employers.co.nz and then our Employers Toolbox Online Library and obtain a letter of variation.