For many businesses the loss of the 90 day trial period that the new Labour government have promised will mean a lot of changes to the way they manage staff. Under the current 90 day trial period legislation all employers are able to hire a new employee (provided that they sign their agreement before they start, they haven’t worked for you before and the trial period is in the agreement) and terminate them within their first 90 days of employment without the risk of a personal grievance for unjustified dismissal.
The proposed changes will limit the trial period to only those employers with less than 20 employees. But employers with 21 or more employees cannot use the period anymore. According to research completed by the Employers and Manufacturers Association (EMA) most employers were using the trial period to take a chance on a new employee – sometimes someone they would not have hired otherwise.
So, if you are an employer that is likely to lose your right to use the trial period what can you do instead? The general advice is to revert back to the probationary period. An employee could still raise a grievance for unjustified dismissal under a probationary period so structure is going to be very important.
I suggest that you have a very structured probationary period and you document this in your employment agreements. The clause should have three set review periods (say monthly), set performance targets based on the role and an understanding from the employee that if they do not meet these standards they may be terminated for poor performance.
That may sound quite harsh but as the EMA survey noted 90 of respondent said that they kept their employees on after the trial period and 94% of these employees stayed between 12-18 months with the company.
We will keep a close eye on the new legislation and let you all know what the final bill means for you.
Tarryn has worked in HR for over 14 years and loves to solve problems. She is a self professed employment relations junkie! She lives in Auckland with her dedicated husband, tireless toddler and three special needs cats.