90-day trial periods, "take a chance on me" legislation
Findings from a nationwide survey of employers have found that the 90-day trial periods should be called the "take a chance on me" legislation.
Initiated by the EMA, the survey was a collaborative effort by its fellow organisations (Business Central, Canterbury Employers’ Chamber of Commerce and Otago Southland Employers Association) to reveal how important the trial period is for businesses.
Almost 1000 businesses responded with 77% saying the 90-day trial period was extremely important part of their decision-making to engage a new employee.
The majority of companies (90%) said they had kept employees on after the trial period had finished. They went on to say that 94% of employees employed under the 90-day trial period remained with them for longer than 12 to 18 months.
The main reasons cited for using a 90-day trial period were to see if the employee was capable of performing the role, to see how they would fit into the workplace, the employer wanted to give them a go and give the new employee time to learn the job.
"All in all, this says that employers are using the 90-day trial period to take a chance on a prospective employee," says Paul Jarvie, Employment Relations and Safety Manager, EMA.
"With unemployment at an all-time low, combined with a current skills shortage, the trial period gives employers the confidence to offer a job to a candidate they may otherwise not consider. The risks associated with hiring the wrong person are high for an employer, from both a financial and reputational perspective.
"For example, if a person has not been in work for a period of time and doesn’t have a current CV, but shows the right attitude, an employer knows the trial period gives them a way to make sure the candidate can fulfil the role," says Mr Jarvie.
Thirty nine percent of survey respondents who had between 19 to 50 staff said removing the 90-day trial period would negatively impact the way they hire staff. And 72% of respondents recommended using the 90-day trial periods.
About 38% of respondents said they had not let anyone go who they had hired under a 90-day trial period and 37% had let between one and two people go since the trial period was introduced in 2009.
The Employment Relations Amendment Bill looks to restrict the 90-day trial period to employers with fewer than 20 staff. For employers with 20 employees or more, they will have the choice of using probationary periods if they wish to use some type of trial period. However, under a probationary period an employee can choose to initiate a personal grievance claim if they feel they are unfairly dismissed.
EMA would prefer if the 90-day trial periods remain as is, available for all employers to use. Based on member feedback, it has proposed in its submission on this Bill that the 90-day trial period is available to employers with fewer than 100 employees.
Respondents to the survey were mainly from the manufacturing sector, with construction, retail, professional services and health care being the next largest sectors. The majority of respondents (39%) employed 11to 49 staff. Twenty percent employed 10 staff or fewer, 18% employed 50 to 100 staff and 14% employed 100 to 250 staff.