Return of the trial period – common pitfalls and lessons learned

Return of the trial period – common pitfalls and lessons learned

Since trial periods were reintroduced to the employers’ toolkit in December 2023, we have noticed a wide spectrum of understanding in this area – from a solid comprehension to a complete misunderstanding or no awareness of the issue.

Below, we briefly cover what has happened in this space, what a trial period is, and common mistakes to be aware of.

 

What has happened in this space?

Trial periods have an unsettled history. First introduced in 2009 for employers with fewer than 20 employees, they were extended in 2011 to employers of all sizes. In 2019, the ability to use trial periods was again restricted to employers with fewer than 20 employees, and this remained the case until the end of 2023.

With the change in government at the end of last year came a reintroduction of trial periods for employers of all sizes. Since 23 December 2023, all employers have been able to enter into an employment agreement containing a trial period.

 

What is a trial period?

A trial period is a tool that employers can use to determine whether an employee is suitable for a role. The maximum duration of a trial period is 90 calendar days, starting on the day the employee commences employment with the employer, and they may only be used for new employees who have not previously worked for the employer.

During a trial period, the employer may dismiss the employee and the employee is barred from bringing a personal grievance against the employer in respect of the dismissal. However, given trial periods are onerous for employees, there are strict requirements imposed on employers wanting to rely on a trial period.

 

Common mistakes

Some common mistakes that render a trial period invalid and/ or render a dismissal in reliance on a trial period unjustified are as follows:

• Failing to clearly document in the employee’s employment agreement:
  • That their employment is subject to a trial period;
  • The duration of the trial period (maximum of 90 calendar days); and
  • The effect of the trial period (that during the trial period the employee may be dismissed and may not bring a personal grievance in respect of the dismissal).

• Failing to advise an employee they are entitled to seek legal advice on an employment agreement containing a trial period.
• Failing to provide an employee a reasonable opportunity to read and consider an employment agreement containing a trial period, and to seek legal advice on that employment agreement, before signing.
• Allowing an employee to start work before signing and returning their employment agreement containing a trial period.
• Miscalculating the end of the trial period and providing notice outside the trial period.
• Failing to strictly comply with the terms of the trial period clause in the employment agreement (for example, if the trial period clause provides that the employer will provide feedback on the employee’s performance throughout the trial period and the employer does not do so, this will render any dismissal unjustified).
• Including a trial period in an employment agreement for an employee on an Accredited Employer Work Visa (AEWV).

It is also important to note that while an employee is prevented from raising a personal grievance in respect of a dismissal during a valid trial period, they can still raise a personal grievance on any of the other grounds specified in the Employment Relations Act 2000 (including, but not limited to, unjustified disadvantage, discrimination, and sexual or racial harassment).

 

If you would like advice on trial periods, or any other employment law advice, please contact our employment team.