A trial period can be useful for both employers and employees in ensuring that the role and the company is appropriate for both parties. Despite their advantages, there are some important conditions and rights which employers need to comply with.
Importantly, an employee can be placed on an employment agreement for the first 90 calendar days of their employment provided it is written in the agreement before the employee starts work and they have not worked for the employer previously.
The following list outlines some of the key components of a valid trial period for employees of any business in New Zealand regardless of size.
A valid trial period:
• Will be written in the employment agreement by way of a 90-day trial period clause before the commencement of work, and agreed to by both parties
• Must be entered into willingly and in good faith. ie an employee cannot be forced into a trial period
• Removes the ability for an employee to bring a personal grievance for unjustified dismissal provided the employer has provided the correct amount of notice
• The employment agreement needs to be signed at least one day prior to commencing employment
• The 90-day trial clause needs to stipulate when the 90-day trial commences
For those employees covered by a collective employment agreement the trial period must be in line with what is outlined in the agreement. For example, if the collective agreement states they cannot be employed on a trial period, then the individual terms of the employee’s contract cannot start the employee on a trial period.
Those employees on valid trial periods are entitled to all of the minimum entitlements of employment such as minimum wage, annual holidays, public holidays, sick leave, and health and safety conditions. Employees on trial periods must be treated equal to the way other employees are treated, to the point where action by employers which distinguishes between the two can enable legal action against the employer.
A personal grievance can still be brought by an employee on a trial period on any other matter except their dismissal. For example, allegations of sexual harassment, pressure regarding union membership, or discrimination are some valid reasons for an employee to raise a personal grievance.
The notice required for terminating an employee during a trial period is what is specified in the employment agreement. That is, if four weeks’ notice is required under the agreement then the same is the case during a trial period. The Employer may specify a shorter notice period during the trial period.
Failing to give appropriate notice to an employee will mean the trial period is invalid and the worker remains employed. The notice for dismissal must also be given in writing during the trial period, regardless of when it is required by notice. For example, if the notice period is one week and the trial period is six weeks the employer must give notice prior to the end of the sixth week.
In dismissing an employee on a trial period the employer does not need to give reasons for their dismissal. However, best practice is to give a reason or at least feedback to ensure the employee has learnt something from the trial period in line with good faith provisions. If an employee asks for a reason though, the employer must provide a reason for dismissal.
Using a 90 day trial period to be sure of how an employee will fit into the organisation and role can be beneficial, however managing this trial period incorrectly can leave an employer liable to legal action from the employee or the Employment Relations Authority. For advice on how to manage trial periods contact Employsure on 0800 675 700.