90 day trial clauses - a long(ish) sunset

Gerrad Brimble, Geoff Bevan

February 2018. . . In January the government announced a range of changes to employment laws. As you will no doubt have heard, a key change is that employers with 20 or more staff (“larger employers”) will no longer be able to use 90 day trial clauses.

When will larger employers have to stop using trial clauses?
Not for a few months, at least.

Last week the government released the draft legislation that will put the change into place. As the draft law currently stands, larger employers can (if they want) keep putting trial clauses in new agreements for a further four months after the Governor General signs the amending legislation into law. Those trial clauses will still offer protection if the employer later dismisses during the 90 days, even if that dismissal occurs after the four month period has ended.

At the moment we do not know when the law will be passed and then signed by the Governor General. It could happen fairly quickly, but equally the law could take some months to work its way through the parliamentary process.

If the law is signed by the Governor General on 1 April 2018 the four month period would end on 1 August 2018. If a business enters into an employment agreement with a new employee on 28 July 2018 and decides at the end of September that it wants to dismiss under the 90 day trial clause, then it will be able to do that. The clause will still be valid, so long as the employer has complied with all of the other requirements that apply to trial clauses, and given notice strictly in accordance with the trial clause. 

As with any draft law, its provisions could change before it is enacted so make sure you check the position once the law passes.

Probation period?
Larger employers who currently use trial periods will want to consider replacing them with the (weaker, but still useful) probationary periods. If you need your employment agreements amended and/or want to talk about your options, please get in contact.