90-Day Trial Period Rules In NZ: What Employers Need To Know

Hiring is exciting - and a little nerve-wracking. You’re investing time, training, and money into someone you’re hoping will help your business grow.

That’s why the 90 day trial period is such a hot topic for New Zealand employers. Used properly, it can reduce some of the risk that comes with taking on a new team member. Used incorrectly, it can create the exact kind of employment dispute you were trying to avoid.

In this guide, we’ll break down what a 90 day trial period is in NZ, when it’s legal, how to set it up correctly, and the practical steps you should take so you’re protected from day one.

What Is A 90 Day Trial Period (And Why Do Employers Use It)?

A 90 day trial period is a specific legal arrangement in New Zealand employment law that can allow an employer to dismiss a new employee within the first 90 calendar days of their employment, and the employee generally can’t bring a personal grievance for unjustified dismissal (as long as the trial period is valid and you follow the correct process).

Small businesses often use trial periods because they:

• help you assess whether a new hire is the right fit in a real working environment
• reduce the risk of being “stuck” with the wrong hire after investing in onboarding
• create a clearer structure for early performance expectations

It’s important to be clear on one thing: a trial period isn’t a “free pass” to dismiss someone for any reason, without any process. It’s a legal tool with strict rules around eligibility, wording and timing.

And in practice, you’ll still want to handle any termination fairly and carefully - especially because employees can still raise other types of personal grievances (we’ll cover this below).

Are 90 Day Trials Legal In NZ (And What Law Applies)?

Yes - 90 day trial periods are legal in NZ, but only if you meet the legal requirements.

The rules around trial periods come from the Employment Relations Act 2000. Over the years, the law has changed around which employers can use them, so it’s understandable that business owners still ask: “Is the 90 day trial still legal in NZ?”

It is legal, but the key is making sure:

• your business is eligible to use a trial period under the current law (this has changed over time)
• the trial clause is drafted correctly
• the clause is agreed to before employment starts

Because the rules can change, and because a small drafting mistake can invalidate the whole clause, it’s worth getting your Employment Contract checked before you rely on a trial period.

When Is A 90 Day Trial Period Valid? Key Legal Requirements

If you’re going to rely on a 90 day trial period, you need to get the setup right at the start. This is the part many employers trip up on - not because they’re trying to cut corners, but because the requirements are surprisingly strict.

1) It Must Be In Writing In The Employment Agreement

A trial period has to be included in the employee’s written employment agreement. A verbal “we’ll see how you go for the first three months” isn’t enough.

Practically, that means the trial period clause should be inside the signed employment agreement you use for that role.

2) The Employee Must Sign Before They Start Work

This is one of the biggest risk areas.

To be valid, the trial period must be agreed to before the employee starts employment. If the employee starts work and you send the contract later (even later that same day), the clause can be invalid.

Good habit: send the employment agreement early, encourage questions, and make sure you’ve received a signed copy before the employee’s first shift.

3) It Must Be For A “New Employee”

The 90 day trial period generally only applies to a new employee who has not previously been employed by you.

This can get tricky where you’ve already engaged someone as a casual employee, on a temporary arrangement, or you’ve had them on payroll before and then want to “restart” them in a new role. In those situations, they may not be a “new employee” for trial period purposes.

It can also get tricky where you’ve engaged someone as a contractor or through labour hire and then you want to bring them on as an employee. If there’s any risk they were really an employee already (even if you called them a contractor), the “new employee” requirement can become fact-specific. It’s worth getting advice before you assume the trial period is available.

4) The Clause Must Be Properly Drafted (Not Just A Template Line)

Even if you’ve got the timing right, the wording matters. A trial clause should clearly cover things like:

• that it is a trial period under the Employment Relations Act
• that it lasts for up to 90 days from the start date
• that the employer can dismiss during that period
• what rights the employee does and does not have (for example, limits around personal grievance for unjustified dismissal)
• any notice requirements during the trial

This is where a properly tailored employment agreement is crucial. If you’re using old templates, copied clauses, or “something you found online”, you might be building a legal risk into your hiring process.

5) You Still Need To Meet Good Faith Obligations

Even with a valid trial clause, you still have obligations of good faith under NZ employment law.

In plain terms, that means you should:

• be honest and communicative with the employee
• avoid misleading them about the role or expectations
• act fairly in how you manage issues

A trial period is not a substitute for good people management - it’s a layer of protection when you’ve done the basics properly.

How To Use A 90 Day Trial Period Correctly (Step-By-Step For Small Businesses)

If you’re a small business owner, you’re usually juggling hiring with everything else (sales, customers, admin, cash flow - the lot). So here’s a practical way to use a 90 day trial period without overcomplicating things.

Step 1: Decide If A Trial Period Is The Right Tool

A trial period can be helpful, but it’s not always the best fit.

For example, if you already know the person well (they’ve worked with you closely before), you might get more value out of a strong probation / review structure rather than relying on a trial clause. Trial periods also won’t protect you from every legal risk (more on that below).

Step 2: Put The Trial Clause In Your Employment Agreement Early

Build the trial clause into your employment agreement from the start, rather than “adding it in later”. For many businesses, the simplest approach is to have one strong base Employment Contract template for permanent staff (full-time/part-time), and then tailor it to the role.

If you hire casual staff, make sure you’re using the right form of agreement for them too - employment status issues can create problems that a trial clause won’t fix.

Step 3: Give The Candidate A Real Chance To Review The Agreement

Even though you might be keen to fill the role, don’t rush this part.

Give the candidate time to read the agreement, ask questions, and (if they want) seek advice. This supports good faith and can help prevent future disputes about whether they genuinely agreed to the clause.

Step 4: Set Expectations From Week One

A trial period works best when the employee understands what “good performance” looks like early on.

You can set this out with:

• a clear position description
• training checklists
• weekly check-ins for the first month
• a documented 30/60/90-day plan

This is also just good management - it increases your chances of turning a new hire into a long-term success.

Step 5: Document Performance Issues As You Go

If issues come up (attendance, attitude, quality, customer complaints), don’t wait until day 89 to deal with them.

Keep notes of:

• what happened and when
• what feedback you gave
• any support or training you offered
• what improvement you expected

If you eventually decide termination is necessary, those notes help show you acted reasonably and in good faith.

Step 6: If You Need To Dismiss, Make Sure Notice Is Given Within The 90 Days (And Follow Your Notice Clause)

This is another common pitfall: the rule is about the first 90 days. In practice, you’ll usually need to ensure notice of dismissal is given before the end of the 90-day period (not just that the employee’s last day happens within the 90 days). If notice is given too late, you may not be able to rely on the trial clause.

Also check your employment agreement for notice requirements and follow them. Many agreements still require notice (or payment in lieu) even during a trial period.

If you’re unsure about timing, notice, or wording, it’s worth getting advice before you act - it’s much easier to prevent a dispute than defend one.

What A 90 Day Trial Period Does Not Protect You From

A 90 day trial period is helpful, but it’s not a full shield against employment claims.

Even if the trial period is valid, an employee may still be able to raise a personal grievance or other claim in situations involving:

• discrimination (for example, decisions based on sex, race, disability, age, religion, family status)
• harassment or bullying
• unjustified disadvantage (for example, being treated unfairly in a way that harms them, even if they weren’t dismissed)
• breach of good faith (for example, misleading conduct or not being honest about the reasons for key decisions)
• holiday / leave pay disputes
• health and safety issues (including if an employee is treated poorly after raising safety concerns)

In other words, you should still manage the employment relationship carefully during the trial.

If your business is growing and you’re building out a team, it can also help to put your expectations and processes into a solid workplace policy framework (for example, performance management processes, confidentiality expectations, conflicts of interest, and tech use). That way, you’re not reinventing the wheel with every hire.

Common Mistakes Employers Make With 90 Day Trial Periods (And How To Avoid Them)

Most trial period problems come down to timing and paperwork - not bad intentions. Here are the most common issues we see, and how you can avoid them.

Mistake 1: The Employee Starts Before Signing

If the employee starts work before signing the agreement, the trial period clause may be invalid.

Fix: make “signed contract received” part of your onboarding checklist before you roster them on.

Mistake 2: Using A Trial Period Clause In The Wrong Kind Of Agreement

Sometimes businesses copy a clause into an agreement that doesn’t fit the role (for example, casual arrangements, fixed-term roles, or where the worker’s true status is unclear).

Fix: use the right type of contract for the engagement, and make sure the terms reflect reality. If you’re engaging someone as a contractor, you’ll want a proper contractor vs subcontractor assessment first - a “trial period” won’t solve a misclassification problem.

Mistake 3: Treating The Trial Period As “No Process Needed”

Even where unjustified dismissal claims may be restricted, you still want to act fairly and consistently.

Fix: have check-ins, give feedback, and avoid surprise terminations without any communication.

Mistake 4: Leaving It Too Late To Decide

If you wait until the end of the 90 days without documenting concerns, you can end up rushed, unclear, and more likely to make a procedural mistake.

Fix: schedule formal reviews (for example at day 30 and day 60) so you have time to correct course.

Mistake 5: Not Matching The Contract To What You Actually Do

If your agreement says one thing but your day-to-day practices say another (for example, you promise structured training but provide none), that inconsistency can create risk.

Fix: keep your agreements and policies aligned with how your business really operates - and update them as you grow.

If you’re building out your employment documentation suite, you may also want to consider how your contractor arrangements work alongside employee hiring. Having a clean, tailored Contractors Agreement can help avoid confusion when you’re scaling quickly.

Key Takeaways

• A 90 day trial period can reduce hiring risk for NZ employers, but only if it’s set up correctly and used fairly.
• Trial period clauses must be in writing and agreed to before the employee starts work - late signatures are a common reason trial periods fail.
• The wording of the trial clause matters, and relying on generic templates can create expensive compliance gaps.
• Even with a valid trial period, employees may still bring claims relating to discrimination, disadvantage, good faith breaches, and other issues.
• The best way to use trial periods is to combine them with clear expectations, documented check-ins, and a well-drafted employment agreement.
• If you’re unsure whether your business is eligible to use a trial period (or whether your clause is enforceable), getting advice early can save you time and stress later.

If you’d like help putting the right Employment Contract in place (including a properly drafted trial period clause) or advice on managing an employee during a trial, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.