By Vaughan Granier

As you may be aware, there has been a change to the law surrounding “Trial Periods”, which will be effective from 6 May 2019.

Trial Period Recap:

The trial period was a strongly employer focussed condition of employment that gave employers the right to undo a recruitment decision within the first 90 days by simply giving a weeks’ written notice to an employee, that their services would be terminated. The employer did not need to give a reason; and except for unfair discrimination, no personal grievance could be submitted and there were no grounds of review. Under the Labour Government, with pressure from labour representation, this employer focussed concept has been unpopular and as a result has now been changed.

Whilst the clause has not removed entirely from the lawbooks, it has been limited to employers who, at the time of the new employee starting, have fewer than 20 employees in total. This means that employers who previously had the right to impose trial periods on new employees may be in danger of breaking the law if the new person being hired is going to be the 20th person on the company books. Those employers should now use a probation period instead.

Points to remember:

  • The trial period must be recorded in a WRITTEN employment agreement which
  • MUST be signed and dated before the first day of work.
  • Notice of termination cannot be given after the 90th calendar day from and including the start date, and
  • The Notice period must be 1 week minimum, and must also be in writing

Probation Period Recap:

A probation period is also usually 90 days from date of employment and while it is also a “testing” period for new employees, it places a higher level of responsibility on the employer and terminations cannot happen for no reason. The same laws regarding fair process apply as for permanent employees, but the benchmark for termination is easier to achieve.

For example, if a new employee were unable to do the task, in a trial period they could simply be terminated. In a probation period, there are steps to be taken before an employee could be terminated, and not following this fair process could result in a Personal Grievance. Each situation is different, but the steps (for example) might be:

  • An initial discussion about the problem to try to understand why it is happening
  • If the employee makes valid points about system or process problems causing the performance, the employer has a responsibility to fix those and see how that works as a solution to the performance problem
  • Otherwise, offer training and guidance to assist the employee to meet the required standard.
  • Have a period of evaluation and a series of meetings to measure progress, being careful to warn the employee that if performance does not reach an acceptable level, termination can – and will – occur.
  • Notice of termination as per contractual requirements

Points to remember:

  • Probation must be a contractual term
  • The employee must be encouraged and assisted formally to succeed wherever possible
  • The right thing to do can be different for different employees in different circumstances
  • Termination is a last resort, not a first option
  • Written records must be kept.

Vaughan Granier is National Workplace Relations Manager for HR Assured NZ.