Trial vs Probation: The Employment Law Mistake That Could Cost Your Business Thousands

Published 21 May 2026 | 5 min read

A 90-day trial period and a probation period are often confused because both are used at the beginning of employment. However, they are very different in purpose, legal effect, and the rights they give to employers and employees. Understanding the distinction is important for both parties, particularly in New Zealand employment law where each arrangement carries different obligations and consequences.

What Is a 90-Day Trial Period?

A 90-day trial period is a specific legal provision that allows an employer to dismiss a new employee within the first 90 days of employment without the employee being able to raise a personal grievance for unjustified dismissal. The purpose of a trial period is to give employers confidence when hiring new staff, particularly when they are unsure whether a candidate is the right fit for the role. During the trial period, the employer can terminate employment if performance, conduct, or suitability is unsatisfactory, provided the correct process is followed.

For a 90-day trial period to be valid, several legal requirements must be met. The trial period must be agreed to in writing before the employee starts work, and the employee must not have worked for the employer previously. The employment agreement must clearly state that a 90-day trial period applies. If these conditions are not met, the trial period may be unenforceable. Although employees cannot challenge the dismissal itself through a personal grievance for unjustified dismissal, they still retain rights relating to discrimination, harassment, or other breaches of employment law.

How Probation Periods Differ

A probation period is different because it does not remove an employee’s right to raise a personal grievance. Instead, it is a period during which the employer assesses the employee’s performance, conduct, and suitability for the role while still being required to follow a fair and reasonable process if dismissal becomes necessary. Employees on probation have the same legal protections as any other employee, including the ability to challenge an unfair dismissal.

Probation periods are commonly used to establish performance expectations, provide training, and allow time for feedback and improvement. A well-managed probation process usually begins with the employer clearly communicating expectations at the start of employment. This may include setting performance goals, outlining behavioural standards, and explaining how progress will be monitored during the probationary period.

Ongoing Feedback and Performance Management

Throughout the probation period, employers should hold regular meetings with the employee to discuss performance, identify any concerns, and provide constructive feedback. If issues arise, the employer is expected to raise them promptly rather than waiting until the end of the probation period. The employee should be told specifically what the concerns are, why the performance is not meeting expectations, and what improvements are required.

A fair probation process also involves giving the employee reasonable support and an opportunity to improve. This could include additional training, mentoring, clearer instructions, or agreed performance targets. Employers should document meetings, warnings, and feedback provided during the process, as these records may become important if the dismissal is later challenged.

Ending Employment Fairly

If the employee’s performance or conduct does not improve sufficiently, the employer must still follow a proper disciplinary or consultation process before making a decision to terminate employment. This generally includes advising the employee that dismissal is being considered, giving them an opportunity to respond to the concerns, and genuinely considering their explanation before making a final decision. Any dismissal must be both substantively justified and procedurally fair.

Managing Risk and Getting the Process Right

Steve Kennedy, Managing Director at EQ Consultants, says many employers underestimate the importance of process during probation periods. “We recently saw a case where an employer believed probation gave them the right to dismiss someone immediately for poor performance. There were no documented meetings, no feedback, and no opportunity to improve. The employee raised a personal grievance and the employer ended up paying a significant settlement, despite the employee clearly not being suitable for the role. Probation periods are not a shortcut around fair process.”

Another key difference is the level of risk involved for employers. A 90-day trial period provides greater protection to employers when ending employment early, while a probation period requires employers to demonstrate fairness and reasonableness at all times. Because of this, employers must carefully decide which arrangement is more suitable for their organisation and ensure the wording in employment agreements is accurate and legally compliant.

Choosing the Right Approach

In practice, both arrangements aim to help employers assess whether a new employee is suitable for the role. However, the legal consequences are significantly different. A 90-day trial period limits an employee’s ability to challenge dismissal, whereas a probation period maintains full employment rights and requires a fair process before termination. Understanding these differences helps employers manage recruitment effectively while ensuring employees understand their rights from the outset of employment.