By Alan McDonald, Head of Advocacy
The new government is not wasting any time reshaping New Zealand’s employment law landscape.
It has already repealed compulsory bargaining “Fair Pay” legislation and has now moved to reinstate 90-day trials for all businesses – a move supported by the business community because it reduces the risk when employing someone new.
It is also good news for those who are looking to get back into the workforce or who are having problems finding that first job.
Why? Because 90-day trials give employers the confidence to take a risk and offer a job to someone that they might not usually offer one to.
While our unemployment rates are at historically low levels, there are still more than 180,000 New Zealanders currently receiving job seeker support.
Worse, about 10% of our 15- to 24-year-olds are not in employment, education or training, and we know that this group is at a much higher risk of becoming disadvantaged or marginalised in the future.
We need to be doing everything we can to support these groups into employment. Ninety-day trials help do this.
We also know they work.
A report on 90-day trials, published in 2012 by the Department of Labour (before it was part of MBIE), found 41% of employers would not have hired their most recent employee without a trial period.
That same report also found that 90-day trials were one of the key government initiatives that had improved employers’ willingness to hire youth or the long-term unemployed.
Our own member survey in 2018, ahead of changes to restrict the trials to business with 19 or fewer employees, found retaining the trials was the policy most wanted by our members, ahead of fixing the highly problematic and yet to be changed Holidays Act.
Any initiative that supports those on the edge of the employment market back into work should be welcome.
Extending the trials so they are available to all employers is important because less than a third of New Zealand workers are employed by businesses with fewer than 20 staff. Almost half of New Zealanders work for companies that employ more than 100 people.
By extending 90-day trials to all businesses there are increased opportunities for Kiwis on the edge of the employment market – and that’s what it’s all about.
They also strike an appropriate balance because they are subject to strict rules to ensure employees are protected.
When employing someone on a trial, it needs to be written into the employment agreement.
A trial can be set for any amount of time, up to a maximum of 90 days, and an employee can’t be subject to a trial if they have worked for the employer previously.
In addition, the employment agreement must include a valid notice period and this notice period still applies during the trial period. That means if an employee has a notice period of two weeks, and the trial is unsuccessful, the employer must give two weeks’ notice.
But if things don’t work out during the trial period, and the employer decides to dismiss an employee, the employee can’t bring a personal grievance for unjustified dismissal or other legal proceeding about their dismissal.
That is the only difference – all other employment law applies. Employees can still bring a personal grievance against an employer if they believe the law has been breached in any other area.
Despite this, one of the disappointing aspects of the debate about the extension of 90-day trials is that they are somehow going to be used as a tool to take advantage of employees.
Yes, there are some unscrupulous employers out there, just as there are unscrupulous employees.
But as a general rule, no employer hires someone with a view of letting them go.
When you bring someone new into your business, you invest significant time and money into their onboarding and training. Having done this, you don’t just let them go and lose that investment, unless there is a good reason.
This is especially the case when the unemployment rate is at historically low levels and good workers are hard to find.
This is backed up by our internal survey results, undertaken when 90-day trials were previously available to all business, which strongly indicated that only a small number of employees had their employment ended during a trial.
Instead, they help create the right incentives for an employer to give someone a go or a second chance. Surely that is something we can get all behind.
