90-day trial periods in NZ: how they work and why they are not a hiring strategy

Under the Employment Relations Act 2000, an employer and a new employee can agree to a trial period of up to 90 days at the start of employment. If the employer dismisses the employee during that period, the employee cannot bring a personal grievance for unjustified dismissal. They can still bring a grievance on other grounds, such as discrimination, harassment or unjustified disadvantage.

Eligibility rules have changed several times. At various points trial periods have been restricted to employers with fewer than 20 employees and then extended again to all employers. Because this is one of the more politically contested pieces of employment law, treat any summary, including this one, as a starting point and confirm the current position on the Employment New Zealand website.

This guide is general information, not legal advice. Get advice from an employment lawyer or HR professional before relying on a trial period to end someone's employment.

Trial periods are strictly interpreted. If any of the requirements is missed, the trial is invalid and the dismissal is treated as an ordinary dismissal, with all the usual process obligations. The common failure points:

1. It must be in the written employment agreement. A verbal mention, an email or a letter of offer that is not the agreement is not enough.
2. The clause must be specific. It needs to state that a trial period applies, how long it is (up to 90 days), that during the period the employer may dismiss the employee, and that the employee cannot bring a personal grievance for unjustified dismissal if that happens.
3. It must be agreed before the employee starts work. Signing on day one after the person has already begun is too late. Have the agreement signed and returned before the start date, and keep proof.
4. The employee must be genuinely new. A trial period cannot be used with someone who has worked for you before, including casual, fixed-term or contracting arrangements in some circumstances.
5. The employee must have had a real chance to get advice. Give them the agreement with enough time to read it and seek independent advice, and tell them they are entitled to.
6. Notice must be given within the trial period. The decision to dismiss and the notice must both happen inside the 90 days. Notice can expire after day 90, but it must be given before.
7. The notice period in the agreement must be followed. Trial periods do not remove the obligation to give notice or pay in lieu where the agreement allows it.

You can	You cannot
Dismiss the employee during the trial without them being able to claim unjustified dismissal	Dismiss for a discriminatory reason, or in a way that breaches good faith
Decline to give written reasons if not asked (though giving them is wise)	Refuse to give reasons if the employee asks for them in writing
Use the trial as a genuine assessment period with feedback and support	Treat the person differently from other staff in pay, leave or entitlements
Extend the employee's role and responsibilities normally	Extend the trial period beyond 90 days, or re-start it
End the trial early and confirm the person in the role	Use a trial period with a previous employee

The duty of good faith still applies throughout. You should be raising concerns as they arise, giving the person a fair chance to respond and improve, and keeping notes. Even where a personal grievance for unjustified dismissal is blocked, a dismissal handled badly can still lead to a claim on other grounds, and it does damage to your reputation in a small market like the Waikato.

A probation period is different. It is a defined period at the start of employment during which performance is reviewed more closely. It can be any length, can be used with existing employees moving into a new role, and does not remove the employee's right to bring a personal grievance. If you dismiss someone during probation, you must follow a full and fair process.

Probation is more work but it is also more flexible and less legally fragile. Many employers use both: a 90-day trial clause for new starters, and a six-month probation with structured reviews on top. The probation framework is what actually helps the person succeed; the trial clause is the backstop if it does not work.

We sometimes hear "we'll put them on a 90-day trial and see how it goes". For a senior or specialist hire, that logic is expensive.

• Good candidates hesitate. A person leaving a secure role for yours is taking a risk. A trial clause tells them the risk is theirs alone. Strong candidates with options often choose the offer without one.
• Ninety days is not long enough to judge a senior role. An Operations Manager is still learning the plant and the people at day 90. Dismissing them then usually means the hiring decision was wrong, not the person.
• The cost has already been spent. Recruitment, onboarding, the three months' salary, the time other people put into settling them in and the disruption of starting again. See the cost of a bad hire for the arithmetic.
• It weakens the hiring process. If the safety net is there, interviewing gets lazier. Reference checks get skipped. Nobody tests whether the role is realistic.

The better investment is at the front: a proper brief, a realistic salary, structured interviews, referencing and a good onboarding process. Trial periods are for the rare case where all of that was done and something still went wrong. That is roughly how we treat them in our own placements. We also run a post-placement follow-up with both the client and the candidate, so if something is off in the first weeks it gets talked about early, when it can still be fixed.

• Confirm the current eligibility rules on the Employment NZ website.
• Get the trial clause drafted or reviewed by someone who does this for a living.
• Send the full employment agreement before the start date, with time to get advice.
• Have it signed and returned before day one. Keep a dated copy.
• Set up a probation-style review structure regardless: expectations at week one, reviews at 30, 60 and 90 days.
• Raise concerns as they arise, in writing, with support offered.
• If you are considering dismissal, get advice before you act, and diarise the 90-day cut-off well in advance.
• If the person is doing well, tell them. Confirming someone early is good for retention and costs nothing.

If you would rather not need the safety net at all, our recruitment strategy and design service helps get the brief, the salary and the process right before you advertise.