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Trial Periods Are Back: Navigating the New Terrain in Employment Agreements

As we were gearing up for our summer holidays last year, a significant legislative HR change quietly made its way into the employment landscape. As of 23 December 2023, trial periods have once again become available for companies businesses of all sizes. This marks a departure from the previous legislation, which restricted the use of trial periods to businesses with fewer than 20 employees.

So, should businesses rush to update their employment agreements to include these trial periods? To answer this, it’s important to understand the nuanced differences between trial periods and probationary periods, which larger businesses have been utilising during the trial period hiatus.

Probationary Periods:  A Refresher

Probationary periods, which have not been as commonly used in New Zealand as in Australia, are clauses in employment agreements that define a period during which an employee’s suitability for a role is assessed. Unlike trial periods, probationary periods focus on supporting the employee through their transition into the business, requiring good faith and fairness from the employer. This involves clear feedback, appropriate training support, and opportunities for the employee to voice their concerns and questions.

Trial Periods:  Back in Play

90-day trial periods have a clear set of rules provided in the Employment Relations Act 2000 and provide a means for an employer to dismiss, and the employee is unable to bring a personal grievance against the employer. The trial period is enforceable only if the employee hasn’t worked for the employer before, has had an opportunity to review the employment terms, has signed the agreement before starting work, contains the required information and has been advised about the trial period during the recruitment process.

The Employment NZ website has clearly outlined the requirements for a trial period clause for your employment agreements.  If you don’t have these then it is likely the clause will be invalid.

Our Take:  Robust Processes Over the Reliance on Agreement Clauses

At Stapleton Consulting, we believe that while probationary and trial periods are useful tools, investing in robust recruitment, induction, and performance development processes is far more beneficial. Methodical recruitment, thorough checks and balances, standardised training, and regular performance reviews contribute significantly to developing valuable employees. These processes should be the focus rather than relying on probationary or trial periods as a safety net for poor hiring decisions.

In summary, the return of trial periods for businesses of all sizes is an important development. However, businesses must weigh their options carefully. While updating employment agreements to include these trial periods might seem like an immediate necessity, a more strategic approach would be to strengthen overall employment processes and use these trial periods judiciously. Remember, the goal is to build a team that contributes positively to the culture and success of the organisation and that requires more than just a clause in an agreement.

As we embrace the return of trial periods, it’s crucial to navigate these changes with strategic insight and a clear understanding of their implications. At Stapleton Consulting, we’re committed to guiding you through these transitions, ensuring that your business remains not just compliant but also a step ahead.

Looking for personalised advice or need help updating your employment agreements? Reach out to us today. Our team of experts is ready to provide you with tailored solutions that align with your unique business needs and help foster a thriving workplace culture.

👉 Don’t let legislative changes catch you off guard. Contact Stapleton Consulting for expert guidance and take the first step towards seamless adaptation to the new employment landscape.

Contact us today

Stay informed, stay prepared, and let’s build a stronger, more resilient workforce together.  This blog has been provided for general information purposes only.

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