Over the last three months, the topic of 90 day trials have formed a part of the business manifesto for campaigning parties ahead of the election in November.
Presently, if you are a business with 19 or fewer staff, you can include a 90-day trial period clause in an Individual Employment Agreement (IEA). The purpose of the 90-day trial provision is to ensure that the new employee is the right fit for the company and vice versa, and should it not work out, that there is no risk or the employee raising a personal grievance, unless it relates to a reason other than exercising the 90-day provision, such as bullying or harassment.
The 90 day trial period is beneficial for businesses as it helps mitigate incorrect hiring choices without the potential financial risk of these. The potential downfalls of the 90 day trial are that there could be a lag in the employment relationship properly forming and the 90 days being a bit of a ‘no man’s land’ with limited development and incentives being offered. Some employers may misuse the system and some employees may manipulate it by being on ’90 days best behaviour’ then their performance slips when they are in the clear.
Opinions vary on 90-day trials. Some laud them as a great business tool. A report by Treasury in 2016 found that 90-day trials had a “statistically and economically insignificant” effect on hiring rates, didn’t increase employment opportunities for beneficiaries or youth, didn’t increase short-term hiring and didn’t increase the likelihood employees would stick with the same employer for a lengthy period of time. There was allegedly “statistically weak evidence” that trials might boost employment in construction and trades.
Labour planned to get rid of trial periods altogether in the last election, but kept them as part of their coalition arrangement with New Zealand First, with the cap of 19 or fewer employees in a business instituted. In the upcoming election the National Party are proposing to reinstate them to give businesses “the confidence to invest and grow”, per the NZ Herald article recently published.