Can You Put An Existing Employee On Trial Or Probation In NZ?

Changing roles is a normal part of running a growing business. You might promote a great team member into a supervisor position, shift someone into sales because they’re great with customers, or move an employee into a different part of the business because priorities have changed.

And then the practical question comes up: can you set a probation period for an existing employee when they move into a new role?

This is where it’s easy to get caught out. In New Zealand, the rules around “trial periods” are very specific, and “probation” is often misunderstood. If you get it wrong, you can end up with a grievance risk at the exact moment you’re trying to make a sensible business decision.

Below, we’ll walk through what you can (and can’t) do, and the safer ways to manage risk when an employee is moving into a new position.

Trial Period vs Probation: What’s The Difference In NZ?

In everyday workplace language, people often use “trial period” and “probation period” interchangeably. Legally, they’re very different.

What Is A Trial Period?

A trial period is a specific legal mechanism under the Employment Relations Act 2000 (commonly referred to as a “90-day trial period”). If it’s validly agreed, it can limit an employee’s ability to bring a personal grievance for unjustified dismissal if you terminate them during the trial period.

It’s important to know that 90-day trial periods aren’t available to every employer. Generally, you can only use a trial period if you have fewer than 20 employees at the time the employee starts work (with some technical rules around how headcount is calculated).

Trial periods also have strict requirements, including that they must be:

• Agreed in writing,
• Included in the employment agreement, and
• Entered into before the employee starts work.

This “before they start” point is crucial for role changes (we’ll get to that below).

Also, a valid trial period only limits personal grievances for unjustified dismissal. It doesn’t prevent other types of claims (for example, discrimination or harassment-related complaints), and you still need to act in good faith.

What Is A Probation Period?

A probation period isn’t a special “switch” you can turn on to remove dismissal risk. It’s more like a practical management tool: you set expectations for the role, provide training and feedback, and check that performance is meeting the standard.

Even if you call it “probation”, the employee still keeps their normal legal rights - including the right to raise a personal grievance if they believe they’ve been treated unfairly.

So, from a legal risk perspective:

• Trial period (if valid) can provide limited protection for unjustified dismissal personal grievances during that period.
• Probation period does not remove the need for a fair process or valid reasons for any disciplinary action or dismissal.

Can You Use A Trial Period For An Existing Employee Moving To A New Role?

In most cases, no - you generally can’t use a statutory “trial period” for someone who is already employed by you, even if they are moving into a new role.

The key issue is that a trial period must be agreed before the employee starts employment. If the person is already your employee, they have already started employment with you.

It doesn’t usually help to “end” their current role and rehire them either. If the reality is that their employment relationship is continuing (and in many cases it will be), attempting to re-paper the arrangement as “new employment” can create risk and can be challenged.

In plain terms: a trial period is designed for new hires, not internal moves.

If your goal is to reduce the risk of an internal promotion or transfer not working out, you’ll usually need to use a different approach (such as a probation-style review period, an acting-up arrangement, or a secondment).

Can You Put An Existing Employee On A Probation Period For A New Role?

This is the core question business owners ask, and the answer is: you can set a probation-style review period, but you need to do it carefully.

A probation-style review period for an existing employee isn’t “illegal” simply because the employee already works for you. The risk is in how you implement it and what you think it allows you to do.

What You Can Do

For an internal move, it’s common (and often sensible) to document something like:

• a review period (e.g. “We’ll review how the role is going at 4 weeks and 8 weeks”),
• training and support the employee will receive,
• KPIs or expectations for the role, and
• what happens if the role isn’t suitable (for example, reverting to the old role, moving to a different role, or starting a performance management process).

Done properly, this gives both sides clarity and reduces misunderstandings.

What You Can’t Do (But Many Employers Assume They Can)

You generally can’t say “it’s probation, so we can dismiss you easily” and treat the employee as having fewer rights.

If the employee struggles in the new role and you want to end their employment, you’ll still need:

• a substantive justification (a genuine reason), and
• a procedurally fair process (clear feedback, opportunity to improve, reasonable support, and a fair decision-making process).

This is where having a properly drafted Employment Contract (and the right variation documents when roles change) makes a big difference.

Best-Practice Options When You’re Not Sure The New Role Will Work Out

If you want to reduce risk when changing an employee’s role, there are a few “safer” structures you can use - depending on what you’re trying to achieve and how much flexibility you need.

1) Use An “Acting” Arrangement (Acting Team Leader, Acting Manager, etc.)

If you’re promoting someone and you’re not 100% sure the fit is right yet, an acting arrangement can be a good middle ground. You might set:

• a defined acting period (e.g. 3 months),
• temporary pay adjustments, and
• a clear review date and decision point.

This can work well where the employee is stepping up, but you want a structured way to confirm capability without implying they have reduced legal rights.

2) Secondment To The New Role

A secondment is often a practical option where you want to temporarily move an employee into a new position while keeping the original employment relationship intact.

Secondments are common when:

• you need someone to cover a parental leave or extended leave role,
• you’re trialling a restructure,
• you’re assessing whether a person is suited to a different role, or
• you want flexibility to move the employee back if needed.

The key is to document it clearly, including the term of the secondment and what happens at the end. In many cases, a tailored Secondment Agreement is the cleanest way to do that.

3) Variation Of Employment Agreement With A Review Clause

If the new role is permanent (for example, a promotion with a new title, pay rate, and responsibilities), you’ll usually want a written variation to the employment agreement.

This is where you can include a “review period” clause that covers:

• what success looks like in the role,
• the support you’ll provide,
• how performance concerns will be raised, and
• what options you’ll consider if the role isn’t working.

It’s important to approach this in good faith, consult with the employee, and give them a genuine chance to consider the change (including seeking independent advice if they want).

4) Performance Management (If The Issue Is Capability, Not “Fit”)

Sometimes the issue isn’t “we’re trialling you in a new role” - it’s that the employee is already in the role and they’re not meeting the required standard.

In that case, a properly handled performance management process is often the right tool. This typically involves:

• clearly explaining the performance concerns,
• setting measurable expectations,
• providing reasonable training/support,
• reviewing progress over time, and
• giving warnings and opportunities to respond where appropriate.

If you’re unsure how to structure it, it’s worth getting advice early - the process matters just as much as the outcome. A clear Performance Management Process can help you stay consistent and reduce the risk of an unfair process claim.

Key Legal Risks To Watch When Using A “Probation Period For Existing Employee”

When you’re managing internal moves, the biggest legal risks usually come from miscommunication and rushed paperwork - not bad intentions.

Here are the common pitfalls to avoid.

Risk 1: Treating “Probation” Like A Shortcut To Dismissal

Calling something probation doesn’t remove the obligation to be fair and reasonable. If you end employment without a proper process, you could face a personal grievance.

Risk 2: Not Documenting What Happens If It Doesn’t Work Out

Many disputes happen because the employer assumes the employee will simply return to their old role - but the employee assumes the promotion is permanent and the old role is gone.

If you want a genuine ability to revert to the prior role, you should document that upfront (and check it’s workable in practice).

Risk 3: Unilateral Changes To Role Or Pay

If you change duties, hours, location, reporting lines, or pay without the employee’s agreement, you can trigger claims (including disadvantage grievances).

Even where you’re trying to “help” by moving someone into a better fit, changes still need to be handled carefully and in good faith.

Risk 4: Redundancy-Style Outcomes Without A Redundancy Process

Sometimes an internal move happens because the business is restructuring. For example, you remove a role, offer the employee a different role, and propose a “probation” period in the new position.

Be careful here. If the underlying driver is that the employee’s old role is being removed, you may be in redundancy territory, which has its own consultation and process expectations.

If you’re navigating a restructure, it’s often worth getting support early so you don’t mix processes (and accidentally create risk). This is where tailored Redundancy Advice can be a smart investment.

Risk 5: Inconsistent Decision-Making Or Workplace Policies Not Matching Practice

Small businesses often run on common sense and trust - which is great - but inconsistency is what creates legal exposure.

If you use “review periods” for some internal moves but not others, or you treat different employees differently, you increase the risk of disputes.

Having clear Workplace Policy documents (even if they’re simple) can help you stay consistent, set expectations early, and reduce misunderstandings.

How To Implement A New-Role “Probation” The Right Way (Practical Checklist)

If you’re considering a probation-style review period for an existing employee, here’s a practical approach that usually aligns with good faith obligations and reduces risk.

Step 1: Be Clear About The Business Reason For The Role Change

Is this a promotion? A lateral move? A change due to restructure? Covering someone on leave? The reason matters because it affects what process is appropriate and what options you realistically have.

Step 2: Discuss The Change Before You Finalise It

Even if the employee is excited about the role, don’t rush past the consultation step. Talk through:

• new responsibilities,
• who they report to,
• hours and location,
• pay and benefits, and
• what support they’ll have to succeed.

Step 3: Put The Arrangement In Writing

You might document it as:

• a variation letter,
• a secondment letter/agreement, or
• a new role description plus a written confirmation of the review plan.

The more the new role changes the original agreement, the more important it is to get the paperwork right.

Step 4: Set A Real Review Plan (Not Just A Label)

If the document says “3-month probation”, but there’s no training, no check-ins, and no feedback until the day you terminate, that label won’t help you.

A better plan includes:

• scheduled check-ins (e.g. week 2, week 6, week 10),
• what will be assessed,
• who will assess it, and
• what additional training or mentoring is available.

Step 5: Think Through The “If It Doesn’t Work Out” Options

This is the step many employers skip - and it’s where problems usually start.

Before the role change begins, decide (and document) what options are genuinely on the table, for example:

• returning to the previous role (if it still exists),
• moving to an alternative suitable role,
• extending the review period with extra support, or
• starting a formal performance management process.

If returning to the old role isn’t actually possible (for example, you backfilled it), it’s better to be upfront about that rather than implying a safety net that isn’t real.

Step 6: Get Advice Before Things Escalate

Most risk arises when a situation becomes urgent - “it’s not working, can we end it this week?” Getting advice early gives you more options and usually leads to a cleaner outcome.

Key Takeaways

• A statutory trial period under NZ law generally applies to new employment, and is generally only available to employers with fewer than 20 employees at the time the employee starts work - so it usually won’t be available when an existing employee moves into a new role.
• You can still use a probation-style review period for an internal move, but it doesn’t remove the need for a fair process or valid reasons if you later take action.
• A well-documented approach (acting arrangement, secondment, or agreement variation) can reduce misunderstandings and help protect your business if the role change doesn’t work out.
• If the issue is capability, a structured performance management process is often more appropriate than relying on the word “probation”.
• If the role change is part of a restructure, be careful not to blur processes - you may need to follow a redundancy-style consultation process depending on the situation.
• Clear documentation and consistent workplace practices are your best protection when managing internal role changes in a small business.

If you’d like help documenting a probation-style review period for an existing employee (or setting up an acting arrangement, secondment, or variation for a new role), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.