The recent amendments to the Employment Relations Act 2000 extend the 90 Day Trial Period to all Employers (previously it was limited to those Employers with 19 Employees or less). 

Key points regarding the 90 day trial period:

1.   Basic principle - An Employer can dismiss a new Employee within the first 90 days of
      employment without risk of a personal grievance as a result of that dismissal if the trial
      period applies.  There can be disqualifying behaviour, and it is unlikely that an Employer can
      ignore all of the usual obligations.

2.   Exceptions - Although a personal grievance may not be brought simply as a result of
      dismissal, it does not exclude personal grievances for:

• discrimination for reasons of race, religion, sex, union membership, age or the like, or 
• unjustified actions prejudicing the Employee during the trial period

3.   In Employment Agreement – The 90 day trial period will only apply if the Employment
      Agreement includes a reference to the trial period. In Smith v Stokes Valley Pharmacy (2009)
      Ltd [2010] the Chief Judge of the Employment Court found that the Employment Agreement
      containing the trial period must be signed prior to the commencement date of the Employee.
      A recent Authority decision illustrates that both parties should sign the agreement prior to the
      commencement date. 

4.   New Employees only – The trial period provisions only apply to Employees new to the
      Employer (so does not include returning or existing Employees switching roles). In the
      Stokes Valley Pharmacy case, because the Employee signed the Employment Agreement
      the day after she started work she was not regarded as a new Employee. 

5.   Notice - An Employer must give notice of termination within the 90 day period. The notice
      period can expire outside the 90 day period but notice must be given within it. To give notice,
      the Employer must identify the Employee’s last day of employment.

• The notice period will be the usual period contained in the Employment Agreement unless another period is included in the trial period clause (the notice period may be shorter for a trial period, provided the Employment Agreement specifies that).
• The Employment Agreement may allow an Employer to place an Employee on ‘garden leave’ or pay them in lieu of notice, but remember during the notice period they are still an Employee. It is good practice at least to consult on the issue of whether the Employee works out the notice period.

6.   General obligation of good faith continues - The obligation to consult an Employee about a
      dismissal is removed during a trial period but the Stokes Valley Pharmacy decision confirmed
      that the general obligation of good faith continues.  In that case the Employer was held to be
      in breach of this general obligation for refusing to tell the Employee why she was dismissed at
      the time, even though the Employer is not required to give grounds of dismissal if sought
      under s120 of the Act. 

• We recommend that an Employer follow the usual process as much as possible. The Employer should give the Employee at least some warning during the trial period that they are not measuring up.
• Note:  if the trial period clause in the Employment Agreement requires consultation the Employer must follow that obligation.