90-Day Trial Period in New Zealand: Employer Compliance Guide (April 2026)
The 90-day trial period under section 67A of the Employment Relations Act 2000 (ERA) allows eligible employers to dismiss a new employee within the first 90 calendar days without facing a personal grievance claim for unjustified dismissal. However, strict compliance is essential. This guide covers the current law as of April 2026, including the small-employer threshold, written agreement requirements, and the critical difference between a trial period and a probationary period.
Key Rule: Small Employer Only (Under 20 Staff)
From 1 April 2026, the 90-day trial period is only available to employers with fewer than 20 employees at the time the employment agreement is entered into (ERA s67A(2)). This includes all employees—full-time, part-time, casual, and fixed-term—but excludes independent contractors. If you have 20 or more employees, you cannot use a 90-day trial period. You may still use a probationary period (see below).
1. Legal Basis: ERA 2000, s67A
The 90-day trial period is governed by section 67A of the Employment Relations Act 2000. Key requirements:
- Employer size: Fewer than 20 employees at the time the agreement is signed (s67A(2)).
- Written agreement: The trial period must be agreed in writing before the employee starts work (s67A(3)(a)).
- Specified period: The agreement must state that the trial period is for a period of 90 days or less (s67A(3)(b)).
- Notice of termination: The employer must give the employee notice of termination within the 90-day period (s67A(4)). The notice period must be the same as the contractual notice period (or statutory minimum if none).
- No personal grievance for unjustified dismissal: If the employer complies with all requirements, the employee cannot bring a personal grievance for unjustified dismissal (s67A(1)). However, they can still bring a grievance for unjustified disadvantage (e.g., discrimination, harassment) or for breach of contract.
Critical: Must Be in Writing Before Start Date
The trial period clause must be included in the individual employment agreement and signed by both parties before the employee begins work. A verbal agreement or a clause added after the start date is invalid. The employee must also receive a copy of the agreement (ERA s65).
2. Dismissal Process During a 90-Day Trial Period
Even though the employee cannot claim unjustified dismissal, the employer must still follow a fair process to avoid other claims (e.g., unjustified disadvantage, breach of contract, or discrimination). The Employment Court has held that the employer must act in good faith (ERA s4) and not in a way that is capricious or arbitrary.
- Give notice: Provide the contractual notice period (or statutory minimum of 1 week if none specified). The notice must be given within the 90-day period.
- Provide reasons (optional but recommended): While not legally required, giving a brief reason (e.g., “performance not meeting expectations”) reduces the risk of a disadvantage claim.
- No need for a full disciplinary process: You do not need to follow a full performance management process, but you should still act reasonably.
- Document everything: Keep records of the trial period clause, the start date, any performance feedback, and the termination notice.
3. 90-Day Trial Period vs. Probationary Period
Many employers confuse trial periods with probationary periods. They are not the same.
| Feature |
90-Day Trial Period (s67A) |
Probationary Period |
| Availability |
Only employers with <20 staff |
Any employer (any size) |
| Protection from personal grievance |
Yes (for unjustified dismissal only) |
No – employee can still bring a personal grievance |
| Maximum length |
90 days (calendar days) |
No statutory limit (typically 3–6 months) |
| Written requirement |
Must be in writing before start |
Should be in writing (best practice) |
| Dismissal process |
Simplified (notice only) |
Must follow full fair process (warnings, opportunity to improve) |
Important: If you are an employer with 20+ staff, you cannot use a 90-day trial period. You can still use a probationary period, but you must follow a fair process and the employee can challenge the dismissal.
4. Common Pitfalls to Avoid
- Using a trial period for a second or subsequent employment: The trial period can only be used for a new employee who has not previously been employed by the same employer (s67A(3)(c)).
- Not counting weekends and public holidays: The 90 days are calendar days, not working days. Day 1 is the first day of work.
- Failing to give notice within 90 days: The notice of termination must be given before the 90th day ends. If the notice period extends beyond day 90, that is fine, but the decision to dismiss must be made within the 90 days.
- Using a trial period for a fixed-term employee: A trial period can be used for a fixed-term employee, but the 90-day period cannot extend beyond the fixed term.
- Not providing a written employment agreement: The trial period clause is invalid if the employee does not receive a signed copy of the agreement before starting work.
5. What About Employees Who Are Not Covered?
The 90-day trial period cannot be used for:
- Employees who have previously worked for the same employer (including in a different role).
- Employees who are transferring to a new employer under a business sale or restructuring (Part 6A of the ERA).
- Employees who are already employed by the employer in a different capacity (e.g., moving from casual to permanent).
6. Practical Steps for Employers
- Check your headcount: Count all employees (including part-time and casual) at the time the agreement is signed. If you have 20 or more, do not use a 90-day trial period.
- Draft a compliant clause: Use wording that clearly states the trial period is for 90 days or less, and that the employer may terminate during that period by giving notice.
- Sign before start: Ensure the employee signs the agreement before their first day of work.
- Provide a copy: Give the employee a signed copy of the agreement.
- Monitor the 90 days: Keep a calendar reminder. If you decide to dismiss, give written notice before day 90 ends.
- Document performance issues: Even though you don’t need a full process, keep notes of any concerns (e.g., missed targets, poor attitude) to justify your decision if challenged.
2026 Update: No Change to Small Employer Threshold
As of April 2026, the law remains unchanged from the 2024 amendments. The 90-day trial period is still only available to employers with fewer than 20 employees. There is no indication of further changes in the near future.
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Frequently asked questions
Can I use a 90-day trial period if I have 20 or more employees?
No. As of April 2026, the 90-day trial period under s67A of the ERA is only available to employers with fewer than 20 employees at the time the employment agreement is signed. If you have 20 or more employees, you cannot use a 90-day trial period. You may use a probationary period instead, but the employee can still bring a personal grievance for unjustified dismissal.
What happens if I don't put the trial period in writing before the employee starts?
The trial period is invalid. If you dismiss the employee during the 90 days without a valid written clause, the employee can bring a personal grievance for unjustified dismissal. The Employment Relations Authority can award reinstatement, lost wages, and compensation. Always ensure the clause is signed by both parties before the employee's first day of work.
Can I dismiss an employee during a 90-day trial period without giving a reason?
Yes, technically you do not need to provide a reason under s67A, but it is best practice to give a brief reason (e.g., 'performance not meeting expectations') to reduce the risk of an unjustified disadvantage claim. You must still act in good faith and not in a capricious or arbitrary manner. Always give the required notice period.
What is the difference between a 90-day trial period and a probationary period?
A 90-day trial period (s67A) is only for small employers (<20 staff) and protects the employer from personal grievance claims for unjustified dismissal. A probationary period can be used by any employer, but the employee retains the right to challenge the dismissal. During a probationary period, the employer must follow a full fair process (warnings, opportunity to improve).
Can I use a 90-day trial period for a fixed-term employee?
Yes, you can use a 90-day trial period for a fixed-term employee, provided the fixed term is longer than 90 days. The trial period cannot extend beyond the fixed term. The same rules apply: the employee must not have worked for you before, and the clause must be in writing before the start date.
Do I need to count weekends and public holidays in the 90 days?
Yes. The 90-day period is calculated in calendar days, not working days. Day 1 is the first day the employee starts work. The notice of termination must be given before the end of the 90th calendar day. If the 90th day falls on a weekend or public holiday, it is safest to give notice on the last working day before that date.