Starting a new job should feel exciting. You’ve made it through the interviews, signed the contract and you’re ready to get started. But for many New Zealand workers, the first few months can come with uncertainty, particularly when the employment agreement includes a 90 day trial period. This clause can affect your job security and your ability to challenge a dismissal. It is important to understand what it really means and what your rights are if you are let go during this time.
Understanding the 90 Day Trial Period
Under the Employment Relations Act 2000, employers can include a 90 day trial period in an employment agreement. The trial allows them to dismiss a new employee within their first 90 days of work without the employee being able to bring a personal grievance for unjustified dismissal. The policy was designed to give employers more confidence to hire, especially when they are unsure whether someone will be the right fit.
For the clause to be legally valid, it must meet very specific conditions. It has to be written into the employment agreement, signed by both parties before the employee starts work, and clearly state that the employee is on a trial period of no more than 90 days. The agreement must also explain that during the trial, the employer may dismiss the employee and the employee cannot bring a personal grievance about that dismissal. The employee must also be genuinely new to the business, meaning they have never worked there before in any capacity. If any of these details are missed or handled incorrectly, the trial period is not valid.
The 2023 Law Change
For several years, only small businesses with fewer than 20 employees could use 90 day trial periods. That changed in December 2023 when the Government extended the policy to all employers, regardless of size. The change was part of the Coalition Government’s 100 Day Plan and aimed to reduce hiring risk for businesses.
According to the Ministry of Business, Innovation and Employment (MBIE), the extension was intended to make it easier for employers to end an unproductive employment relationship without facing the costs or time involved in a formal process. However, MBIE’s own analysis shows that these trial periods have not significantly increased hiring overall. In fact, the main difference appears to be a greater sense of insecurity for employees who start new roles on a trial basis.
Your Rights During a Trial Period
Even if your role includes a 90 day trial clause, you still have the same fundamental rights as any other employee. You are entitled to be paid properly for all hours worked, to work in a safe environment, and to be treated fairly and respectfully. You can also take leave as allowed under your agreement or by law.
A valid trial period only limits your ability to challenge a dismissal as unjustified. It does not remove your right to raise a personal grievance about other issues. You can still take action if you are discriminated against, harassed, bullied or disadvantaged in your job. The law also protects you from pressure around union membership or any other breach of good-faith obligations.
When a Trial Period is Invalid
Many employers misunderstand or misapply the rules. MBIE found that three quarters of all 90 day trial provisions reviewed by the Employment Relations Authority between 2015 and 2023 were ruled invalid. The most common problems were that the employee started working before signing the contract, the employer failed to give the employee time to seek independent advice, or the trial clause itself was not worded correctly. Other issues included employers who were too large to use a trial before the 2023 law change, or who failed to give notice correctly.
If a trial period is invalid, the employee can bring a personal grievance just as they could under a standard employment arrangement.
90-Day Trial Period Dismissal
If your employer dismisses you under a valid trial period, they still have to follow certain rules. They must give you notice as set out in your employment agreement or, if no notice is specified, a reasonable period of notice. Your final day of work can be after the 90-day period as long as the notice was given before the trial ended.
Although the law does not require the employer to give a reason, they are still expected to act in good faith. It is considered best practice for employers to communicate clearly, treat the employee respectfully and provide written confirmation of the decision. You are also entitled to all final pay and holiday pay owed to you.
Trial Periods and Probationary Periods
The terms “trial period” and “probationary period” are often used as if they mean the same thing, but legally they are quite different.
A 90 day trial period is only for brand new employees and must meet the strict criteria in the law. It is intended to give an employer a short window to assess whether the person is suitable for the role. If the employer decides the fit is not right, they can end the employment without having to go through a full disciplinary or performance process, and the employee cannot bring a claim for unjustified dismissal.
A probationary period, on the other hand, is used to give an employee the opportunity to prove themselves, usually when they are new to a role or have moved into a new position with the same employer. There is no fixed time limit, but the period must be reasonable. During probation, the employer must provide training, feedback and a genuine chance for improvement. If they do not, or if they dismiss the employee without good reason, the employee can challenge the decision through a personal grievance.
In simple terms, a trial period tests a new employment relationship, while a probationary period helps an existing relationship develop. Employers cannot use both at once.
What to Do if You’re Dismissed During a Trial
If you are dismissed during a trial period, it can be an upsetting and confusing experience. Start by checking your employment agreement to make sure the trial clause is properly included and that you signed it before your first day of work. Confirm the date you received notice and the length of the notice period. If anything seems unclear or inconsistent with the law, seek advice straight away.
An employment advocate can review your agreement, assess whether the trial was valid and explain your options. If it turns out that your employer did not follow the correct process, or that the trial clause is invalid, you may still be able to challenge the dismissal.
The Bigger Picture
MBIE’s 2023 Regulatory Impact Statement on the 90 day trial policy highlighted that while the change gives employers more flexibility, it may also create greater insecurity for workers. The research showed that small employers are most likely to benefit because they have fewer resources to handle lengthy employment processes. Larger employers already tend to have HR teams and established procedures for managing performance issues, so the practical benefits are smaller.
Ultimately, the policy is unlikely to increase overall employment, but it does affect the experience of many new employees. For some, that can mean feeling less confident about changing jobs or taking risks early in their employment.
When to Seek Help
The 90 day trial period was designed to give employers confidence to hire, but it also comes with responsibility. Even when you are on a trial, your employer must treat you fairly and act within the law. You still have rights, and if something does not feel right, there is help available.
If you have been dismissed under a 90 day trial period and are unsure whether your employer followed the rules, it is worth getting professional advice. At My Advocate, we can review your employment agreement, check the validity of the trial clause and explain your rights clearly. We can also support you through mediation or other steps if you have grounds for a grievance. Get in touch for an initial free consultation and find out your options.