In December 2023, the New Zealand government passed new legislation reinstating 90-day trial periods for all employers, marking a significant shift in employment law.

Previously, the 90-day trial provisions only applied to businesses with 19 or fewer employees, limiting its reach primarily to small and medium-sized enterprises (SMEs). However, the new legislation expands this policy to include all employers, regardless of their size or industry. This change has been met with mixed reactions from various sectors of society.

The 90-day trial period allows employers to terminate a new employee’s contract within the first 90 days of employment without the risk of the employee raising a personal grievance for unjustified dismissal. Essentially, it provides businesses with a “trial run” of an employee, giving them the opportunity to assess whether the new hire is a good fit for the role and the organization without facing potential legal consequences if the employment relationship doesn’t work out.

The bill that reinstated the 90-day trials passed with the support of all three governing parties. These parties argued that the 90-day trial periods offer businesses the flexibility they need to hire more freely, especially in uncertain economic times. According to supporters, it reduces the risks associated with taking on new employees, encouraging businesses to create more job opportunities and provide chances to those who may otherwise struggle to get hired, such as inexperienced workers or those re-entering the workforce.

On the other hand, all three opposition parties opposed the legislation, raising concerns about the potential for abuse by employers. Critics argue that the 90-day trial period can lead to job insecurity, as it gives employers the ability to dismiss employees without any justification, leaving workers vulnerable. Opposition parties and labor advocates contend that removing an employee’s right to challenge an unfair dismissal could create a power imbalance in the workplace, making employees feel less protected in their roles.

Prior to December 23, 2023, this trial period only applied to small businesses with fewer than 20 employees. The new law now brings larger businesses under the same umbrella, significantly expanding the scope of the policy.

With the reinstatement of 90-day trials for all employers, businesses of all sizes now have the option to hire with more flexibility. However, the broader implications of this policy on job security and workplace fairness remain a topic of debate among politicians, businesses, and workers alike.