What are the differences between probation periods and trial periods in New Zealand?

• Published date: 19 July 2023
• Subject Matter: Employment and HR, Contract of Employment
• Law Firm: LegalVision
• Author: Ms Louise Miao

Trial and probation periods are a good way of deciding whether an employee has the right skills and is fit for your business. Trial periods have a maximum limit of 90 days or three months, whereas probation periods last around six months. While the terms probation and trial period are fairly interchangeable, the employment agreement should specifically state that the 90-day trial period is a trial period. This article will compare whether a probation or trial period is right for your business.

What Are 90-Day Trial Periods?

90-day trial periods allow employers to terminate a new employee without repercussion or providing any reason. Employers must undertake the termination within 90 days of the employee's employment. However, trial periods are not available to all employers. For a 90-day trial period to be valid, the following criteria must be met:

• both the employer and the employee agree to the 90-day trial period before they commence work;
• you record the agreement in writing;
• you have 19 or fewer employees; and
• you have not previously employed the employee.

How Can Employers Enforce 90-Day Trial Periods?

As 90-day trial periods give employers the upper hand in an employment relationship, the relevant laws are stringent. If you miss a step or do not follow the rules around the trial periods, they are likely to be invalid.

A common pitfall amongst employers is that they assume the 90-day trial period refers to 90 working days. However, a 90-day trial period includes any weekends and public holidays from the beginning of employment.

90-day trial periods may also be fewer than 90 days. However, as an employer, it would be more advantageous to utilise the entire 90 days rather than shorten the period. If you choose to use a shorter notice period, remember that you cannot extend the trial period to 90 days after the fact.

It is important to note that although you may terminate the employment without reason during this period, employees can still claim a personal grievance for factors unrelated to the termination, such as discrimination or harassment.

What Are Probation Periods?

Probation periods are slightly more flexible compared to 90-day trial periods. Employers typically use probation periods when onboarding new employees. However, you can also use...