Tuesday, 9 September 2014

90-day Trial – 5 Years On

Originally limited to use by small business (those employing fewer than 20 persons) the 90-day trial was introduced on 1 March 2009.  It was subsequently extended to enable use by all organisations.

Despite dire predictions from trade unions of a “fire at will” mentality being created, the 90-day trial scheme has been almost universally popular with employers and smaller employers in particular.  Many hail the scheme as being responsible for providing them with the confidence to engage employees who would not otherwise have been given the chance of employment.  In the majority of cases the employment relationship has worked well and we believe that many more people are now in employment than would otherwise have been the case without the trial.

Local carpet retailer Carpet Kingdom is typical of the SME’s who have embraced the 90-day trial.  Owner Terry Delore says that without the 90-day trial several of those with the company today would probably never have been given the chance of employment by Carpet Kingdom.  “It’s been a good scheme” he says, “and it’s worked well for both us and our employees”.  “Everyone has had a decent opportunity to evaluate whether a job in this industry and Carpet Kingdom is right for them and we’ve been able to have a good look at them and their work ethic at the same time”.  “Removing this scheme would be madness” Terry says.

Many advocate that the trial period should be longer than the maximum 90-days currently permitted.  They cite the longer trial periods prevalent in other countries such as the UK and Australia.  There is some force in that argument particularly given that the present scheme does not allow for extension under any circumstances.  An employee could, for example, be employed for a week then suffer an accident and be off work for a lengthy period thereby effectively devaluing the purpose of the trial through not having sufficient time within whatever is left of the 90 days to practically demonstrate suitability for the position.

Most concern though is not with the scheme itself but the stringent requirements which act as a precondition to its legality.  It must be an agreed term of the written employment agreement and that agreement must be signed before employment commences.  Failure to do so will mean that the employee will not be regarded as a new employee – the 90-day trial is restricted to new employment relationships i.e. where there has been no previous employment relationship between the parties – and therefore not subject to the terms of the trial which restrict an employee’s ability to bring personal grievance proceedings.

Given the uptake and success of the 90-day trial it is suggested that consideration should be given to reversing the present situation so that all employment relationships would, by law, be assumed to be subject to trial unless the parties otherwise agree.  This would remove the burden now placed on employers to make sure the paperwork is squared away before the trial can lawfully exist.

No political party appears to be ready to adopt that particular approach. Instead the Labour Party has said that it will abolish the 90-day trial.  That would not be a popular move amongst the legions of small employers in New Zealand and would almost certainly have repercussions for job seekers at the margins (e.g. youth, migrants etc.) and at times when employment is needed most.

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