The National Parties new variation to the Employment Relations Act 2000 provides for a 90 day Trial Period for new employees effective when employed on or after 1st March 2009.

Whilst this applies to businesses employing no more than 19 staff at one time when the new employee is employed, all employers can still include a Probationary Period no matter what size the business is or how many employees. This probationary period can be for 90 days or more. The exit procedure in the probationary period must comply with the exit procedure laid out in the Employment Relations Act 2000 as in the past.

We feel that the trial period is a good move for small businesses that sometimes are reluctant to employ someone because of the risk of the employee not working out and the difficult process in order to exit them under the current law. In small businesses this can be a costly mistake.

Any trail period must be agreed to by both parties (the employer and the employee) in good faith and in writing as part of the employment agreement. There can be only one trial period per employee and it cannot be extended. If you are employing someone who has worked for your company in the past and is returning to work for you then there can be no trail period.

The trial period can be bargained for in a fair way between the employee and the employer. Although the amendment states that no reason needs to be given to exit an employee after the 90 days, we consider that there needs to be negotiated key performance indicators that both parties agree to. These indicators should be measureable and monitored on a regular basis so that the employee is aware of any areas that they need to improve on during the 90 days. Notice of your intent to no longer employ the employee can be given during the 90 day period however the employee is entitled to work out the 90 days.

 

Trial period employees cannot be dismissed after the 90 days are up unless complying with the exit process laid out in the Employment Agreement Act 2000.

 

No reason needs to be given by the Employer to the Employee why they will not be offered a permanent position once the trial period is completed. An employee who is exited at the end of the trial period cannot raise a personal grievance on the grounds of unjustified dismissal, however a personal grievance can be raised if they feel that there has been discrimination, harassment or an unjustified action by the employer. Therefore if the employee suspects that the Human Rights Act has not been complied with in their case they can take out a personal grievance. During the trial period the employee is still entitled to holidays and leave.

It is possible for companies with 19 employees or less to use both the trial period for the first 90 days and then include a probationary period as well. This will give an extended time for the employee to be under probation however it must be noted that after the 90 days trial period has been completed any extended probationary period must comply with the normal exit process in the Employment Relations Act 2000.

We encourage companies and candidates who negotiate a trial period to develop as part of the negotiation a measurement system. Employees agreeing to the trial period need to negotiate at the level they can succeed and the employers the level of performance that the role requires. Trial periods should be seen as fair to both parties.