90 day trial periods are back for all employers (again) | Blog | PaySauce

90 day trial periods are back for all employers (again)

Welcome to our summary of a rather unique aspect of New Zealand's employment environment - the 90-day trial period.

The 'try before you buy' system for employers! If things don't quite work out, an employer can part ways with a new employee within 90 days. The employee, in turn, can't claim for unjustified dismissal.

Trial periods have had a variety of tweaks over the years since they were introduced: First introduced in 2009 for small employers and later expanded to all employers in 2011, before then being reduced back to small employers only again and most recently as of 23rd December 2023 are now available again to employers of all sizes. We know that trial periods have some tricky bits and potential traps for employers, so let’s have a look at the purpose of the trial period, pros and cons, and using the trial periods correctly.


The 90-day trial period was primarily introduced to give employers a bit of courage to hire candidates. It is fairly well known that hiring can be a bit of a gamble - you might do all the right things with your recruitment process, including robust fair assessments, reference checking, practical work testing - but you may still end up with an employee that isn’t a good fit for your business. It is also relatively well known that ending someone’s employment correctly and fairly without giving rise to any potential for claims against you can be a difficult, complicated and time consuming process. A process that smaller employers often do not have the time, resources or capability to manage correctly!

The intent is to give employers the confidence to make a hire, knowing that if things don’t work out, they’ll be able to end the employment relatively painlessly within that 90 day period. It hopefully meant that employers would be more likely to hire someone who they may not otherwise - people who may otherwise struggle to find employment (limited experience, gaps or changes in career history, etc). A bit of a safety net for employers, if you will. Depending on your source, however, the evidence is very limited on actual increases in hiring and advantages to job seekers.

Pros & cons

Like anything else, the 90-day trial period has its ups and downs. From the employer's point of view, it lessens the risk linked to hiring and offers flexibility. For potential employees, it could provide opportunities that might have otherwise remained closed. But it's not all sunshine and rainbows - trial periods have potential for misuse and abuse, and inevitably, this has occurred. Employers using the trial period to end employment for illegitimate reasons. Employers who use it as a bit of a revolving door, ending employment quickly and unfairly while bringing in new workers only to do the same again. Furthermore, there’s the employees who lack job security, and are perhaps unwilling to leave one job for another if they face the potential of losing their new job within 90 days.

The potential implications of the 90-day trial period reach far and wide. On the employment front, there’s the argument it could potentially boost employment levels, especially for those finding it tough to secure work. But there are also social implications - job instability and insecurity, which in turn, could have effects on housing stability, mental health, etc.

The trial period gives a significant advantage to the employer, so it makes sense that there are strict rules that need to be followed to make sure they are valid and enforceable.

Using trial periods

Here’s the key points you should be aware of when using trial periods to ensure they are valid and enforceable.

If you have a valid trial period, being used correctly, you are able to dismiss an employee within the period stated. This employee will not be able to bring a personal grievance against you for their dismissal. However, that does not prevent an employee having other claims against you if there were valid claims to be had about other issues. You are protected against claims relating to the dismissal (assuming you have correctly applied all requirements for the trial period, they cannot claim unjustified dismissal). Employees may still bring claims against you for discrimination or harassment, or activity on your part that unjustifiably disadvantages them during the course of their employment.

You aren’t required to give a reason for why you are dismissing the employee, but providing your fair and reasonable reasons shows you are acting in good faith. Of course, your reasons will be fair and reasonable!

We recommend using the Employment Agreement Builder to create agreements containing trial periods, to ensure that you have the provisions correctly stated. If you have unique or complicated circumstances, we definitely recommend seeking advice specific to your situation from a lawyer. It is also important to note that if your employee is on or applying for some types of work visa, trial periods (and probationary periods, which are different) may impact this and you may need to remove or exclude them in these cases.

Trial periods and employment rights

Many of us working at PaySauce have been working in payroll since before trial periods were introduced, and over the years we’ve heard all sorts of interesting statements about employee’s rights under trial periods! We’ll recap the most important ones that everyone needs to be aware of. Employees working in trial periods are still entitled to all normal entitlements, and if you’re an employer using a trial period it is important to be aware of.

Basically, you should keep in mind that the trial period specifically relates to protection for the employer against cases of unjustified dismissal in the event that employment ends, but for all other intents and purposes the employee is just that - an employee.

The last word

The 90-day trial period in New Zealand is a blessing for many small-medium employers, and while it might inspire employers to take a punt on hiring when they might have not otherwise, it can also feed into job insecurity and be misused horribly - causing some individuals harm.

Employers, given this pretty big advantage, need to make sure they’re following the rules of trial periods very well to make sure the trial periods are enforceable. If not, they may still have valid claims upheld and face significant financial penalties.

If you’re an employer using trial periods, we reckon you should:

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Posted on 26 January 2024

Jessica McLean
CPO - PaySauce

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