Preparing for the end of trial periods.

Jason Ennor, Co-founder and CEO at MyHR
by, Jason Ennor, Co-founder and CEO at MyHR

If you use 90-day trial periods it might be time to start thinking about removing this practice from your business.

We have just finished 18 months of significant change to employment law and it looks like we’re in for another 3 years. While policy is yet to be finalized, one change that would seem to be inevitable is a change to 90-day trial periods.

Labour haven’t said they will abolish the trial period, however the changes they are proposing will have the same effect, I believe, as few employers will use them. This is because the new trial period process will be difficult and hand the final outcome to an external party.

Contrary to the scare mongering, I have seen no evidence of widespread exploitation under the current trial period law. While Treasury numbers don’t support an uplift in employment resulting from trial periods, anecdotally I see hiring decisions made every day, by small employers, that contradict Treasury’s findings. Small employers feel a sense of safety knowing that if they muck-up, there is a way out.

Nobody hires a new person expecting to dismiss them, recruitment takes work and wherever possible employers want to do it right, do it once. Having good employees is the outcome every decent business owner is looking for, unfortunately sometimes they get it wrong; that’s where the trial period helps.

In my experience, dodgy employers, who exploit the current law, are already dodgy and will find ways to exploit or mistreat employees for their gain, no matter what legislation is in place. These are the minority, and fortunately, more of them are getting caught. Some of the recent MBIE fines are heartening. We don’t need theses employers and they do not represent the majority. But we shouldn’t associate the many good employers in NZ with these idiots. Most small kiwi businesses work hard to build a great working environment and genuinely want things to work out with their new staff.

I certainly support steps to protect vulnerable workers, I’m just not sure this is the right approach. It is regressive and very narrow in its focus. Making trial periods unworkable will result in a recruitment slow-down for small employers.

Labour’s plan will:

“…establish a new referee service for claims of unjustified dismissal during trial periods. The referee will hold short hearings without lawyers and be able to make decisions to reinstate or award damages of up to a capped amount.”

Two parts of this plan are interesting:

  • The “short hearings” really just sound like mediation, don’t they? A service that already exists. Mediation does not require lawyers (although they are allowed). The environment is less formal than court, it is without prejudice and focused on reaching a mutually agreed outcome, as quickly as possible, avoiding court.

So why create another public service? Who are these referees; Labour Inspectors, Mediators or another classification of government employee altogether?

  • The referees do differ from mediation in one important area, according to Labour’s statement, they will “…be able to make decisions to reinstate or award damages of up to a capped amount.” Meaning if an employer chooses to use a 90-day trial period, they will be agreeing to put the final decision into the hands of a party external to the business, who has authority to overturn the outcome, compel the employer to rehire and/or award damages.

There is no mention of a right of appeal or details on how this process could work in practice. But it certainly sounds more onerous than the current internal meeting process.

Under this plan, I cannot imagine employers choosing to use a trial period and so we will likely see their end. If this is the desired outcome, why not just abolish trial periods and be done with it? Labour should set the standard and start this new era of Kiwi politics with honest disclosure of true intentions.

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