90-day trial periods

Over the last month we have had quite a few queries about 90-day trial periods.  These questions have included their validity when there have been paid training days.

Paid training days before formalising employment complicates things. Once you pay someone for undertaking work they are seen as an employee, and at this stage you haven’t provided the applicant with any terms and conditions of work in their employment agreement.  Having a signed agreement before starting work is a legislative requirement.

By having paid training days on the above basis, you have also removed the ability to include or enforce a 90-day trial as it can only be used for new employees. As you have paid them for the training day, they would no longer be considered a new employee.

Rather than the paid training day that will only provide you with a brief insight into the applicants’ attitude and ability, we would suggest you offer your preferred applicant the role and if it becomes apparent that you have made the wrong choice you can rely on the 90-day trial period. If training is required, this can be completed after the start of their employment as part of the induction process.

The trial period is for up to 90 calendar days.

There are still criteria for the trial period to be valid.

• A trial period may be used for new employees only, meaning employees who have not previously been employed by you.
• A new employee is not automatically subject to a trial period. A trial period should be discussed during the recruitment process and must be agreed in writing. A clause must be included in the employee's individual employment agreement (IEA) and in the letter of offer. You may want to consider shortening the notice period for the trial period clause.
• The IEA containing the trial period must be signed by the employee before the employee commences work. This means that if the employee starts work at 8am on a Monday, the IEA must be signed before 8am if the employee is signing the agreement on the day. It is always preferable that they sign the document at least one day before so there is no dispute about the timing that the document was signed.
• If you decide to terminate an employee's employment under a trial period clause, notice of termination must be given within the trial period (which can be up to 90 days). However, the notice period itself can extend outside the trial period.
• Notice must be provided in accordance with the employee's employment agreement. The parties may agree that a shorter notice period will apply during the trial period (e.g. one week instead of four weeks), but that notice period must be recorded in the employment agreement (ideally in the trial period clause).
• A trial period is a one-off – it cannot be rolled over or extended, even if the employee is absent from work for a prolonged period during this time.
• The employer's overriding obligation to act fairly and reasonably in its dealings with the employee, remains during a trial period. It is also recommended that any decision to dismiss still be preceded by a fair process.

During the trial period the duty of good faith still applies for both parties. The employer should, where possible, provide:

• a thorough induction process
• buddying with an existing employee
• training needs analysis, that identifies areas where further specific training might be required
• regular meetings to discuss how things are going for the employee and giving feedback
• managing areas that need improvement and giving appropriate support.

If you decide to give notice of termination under the 90-day trial, then this should be done in writing. If included in the employment agreement, you could make payment in lieu of notice. There should be a valid reason for the dismissal, although under legislation you do not need to provide this.

Employees can still bring a personal grievance for sexual or racial harassment, unjustified disadvantage, discrimination, or failure to comply with the continuity provisions where there is a sale or transfer of business.

If your practice is party to the PHC MECA

If your practice is a party to the Primary Health Care MECA (MECA) then all employees whose role falls under the coverage of the MECA, and are NZNO members, are employed under the terms and conditions of the MECA. Full details of the agreed 90-day trial provisions, including the notice period, should be included in the letter of offer to be signed by the employee. For new employees who are not members of NZNO remember the 30-day rule applies.