What Employers Need To Know About Using A 90-Day Trial Period

Hiring a new employee can sometimes feel like a gamble.  You want to grow your business, build a great team, and protect the culture you’ve worked hard to create. But what happens if the new hire isn’t the right fit?  That’s where a 90-day trial period can help.

When used correctly, a 90-day trial gives employers the chance to assess whether a new employee is suitable for the role, while reducing the risk of a personal grievance claim for dismissal.  Saying that, it is important that you get all the steps right to ensure that the trial period is valid. Failure to do that means the employee may still be able to raise a personal grievance, and the costs can be significant.  

What Is a 90-Day Trial Period?

A 90-day trial period allows an employer to dismiss a new employee within their first 90 days of employment without the employee being able to raise a personal grievance for unjustified dismissal.  However, employees can still raise other types of personal grievances, such as discrimination, harassment, retaliation or unjustified disadvantage.  A trial period is not a free pass to treat employees unfairly. Employers still need to act in good faith throughout the employment relationship.

Who Can Use a 90-Day Trial?

Most NZ employers can use 90-day trial periods, regardless of business size.  But there are strict rules around which employees are eligible.  A valid 90-day trial can only be used when:

• The employee has never worked for you before, 

• The employee signs the employment agreement before starting work, and

• The employment agreement clearly states there is a 90-day trial period.  

If any of these requirements are missing, the trial period is likely invalid.

Who Is NOT Eligible for a 90-Day Trial?

An employee is not eligible if they have worked for you before.  This includes:

• Casual employees,

• Temporary workers,

• Seasonal staff,

• Employees rehired after leaving, and

• Staff who did unpaid trial shifts that could legally count as work.  

An employee is not eligible if they started work before signing their employment agreement.  This is one of the most common mistakes employers make.  If the employee starts training, attends induction, begins shadowing, or does any work before signing the employment agreement containing the trial clause, the trial period may be unenforceable.  That includes:

• 'Just coming in to meet the team,'

• Paid training before signing,

• Trial shifts, and 

• Starting on a handshake agreement

If work has started, it may already be too late.

What Must Happen for the Trial Period to Be Valid?

To protect your business, every one of these steps matters.

The trial period must be in writing

The employment agreement must clearly include a valid 90-day trial clause.  Verbal agreements are not enough.

The employee must sign BEFORE starting work

This is critical.  The signed agreement needs to be completed before the employee:

• Starts training,

• Attends induction,

• Does any work, and 

• Begins their first shift.

Even if everyone intended to sign later, the law focuses on when work actually started.

The employee must genuinely be a new employee

You cannot use a trial period for an existing employee changing roles within the business.

The dismissal must happen within the 90 days

If you decide the employee is not the right fit, notice of termination must be given within the 90-day period.  Missing the deadline can remove your protection.

You still need to act fairly and reasonably

While a valid trial period limits unjustified dismissal claims, employers still need to communicate clearly, give feedback, behave professionally, follow good process, and act in good faith.  Good HR practice still matters.

Common Mistakes Employers Make When Putting Employees On A 90-Day Trial

Here are some of the biggest issues we see:

The employee starts work before the paperwork is finished

This is the number one problem.  Busy employers often think they’ll sort the contract later.  Unfortunately, later can become very expensive.

Copying old employment agreements

Old templates may contain outdated or invalid clauses.  Employment law changes regularly, and generic online templates can create major risks. 

Assuming casual workers count as new.

If someone has already worked for your business, even casually, they may not qualify for a trial period.

No performance conversations during the 90 days

A trial period should never replace good leadership.  Regular feedback and documented conversations are still important.

What Should Employers Do During the 90 Days?

The best employers use trial periods as a structured onboarding process, not just a safety net.  We recommend:

• Clear expectations from day one,

• Regular check-ins,

• Written notes of performance concerns,

• Early conversations if issues arise,

• Proper training and support, and

• Honest communication.  

Often, problems can be fixed early with the right guidance.  And if the employee does turn out to be a great fit? Fantastic. You’ve built a stronger team member with better systems and support.

FAQs

 Can an employee challenge a dismissal during a trial period?

They usually cannot raise an unjustified dismissal claim if the trial period is valid.  However, they may still raise other grievances, such as discrimination or bullying claims.

Can I use a trial period for existing staff moving into a new role?

No.  Trial periods only apply to genuinely new employees who have never worked for your business before.

Does the employee need a copy of the agreement before signing?

Yes.  Employees must be given time to review the agreement and seek advice before signing.  Rushing this process can create risk.

Can I dismiss someone on day 89?

Yes, as long as notice is given within the 90-day period and the trial clause is valid.

Do I need to give warnings during a trial period?

Legally, a formal disciplinary process may not be required in the same way as standard dismissals.  But good communication, feedback, and fair treatment are still strongly recommended.

A 90-day trial period can be a useful tool for protecting your business when hiring new staff  but the rules are strict.  One missed step, especially around signing the agreement before work starts, can completely remove the protection employers thought they had.  For busy business owners already juggling staffing, operations, customers, and family life, it’s easy to overlook the details. That’s why having proper systems and expert HR support matters.

At Employer Direct, we help employers get their employment agreements, onboarding processes, and HR systems right from the start so you can focus on running your business with confidence.  Do you need help reviewing your employment agreements or onboarding process? Get in touch with the Employer Direct team for practical advice and support. Employer-Direct.co.nz | 0800 612 355

Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.