Trial and error


At the CCNZ conference in Hamilton during my Q&A session, I was asked what the implications will be for recruitment of staff with the introduction of the New Zealand Employment Relations Amendment Bill.

This question was directed mostly at the potential abolishment of the 90-day trial period.

My response at the time was to think about the fact that while the trial period legislation is a protective legal blanket, don’t use it as an excuse to have poor recruiting practices.

If you do the upfront work recruiting staff robustly, consistently and in a collaborative manner, then I believe you can mitigate a lot of the potential issues that may lead you to utilise the 90-day trial period legislation.

The trial period has been in place for employers with companies of all sizes since April 2011, via amendments to the Employment Relations Act 2000. A large percentage of employees have this included in their employment agreements which gives an employer the ability to terminate an employee within the initial 90-day window without risk of being subject to a personal grievance claim.

I recently attended a presentation by Scott Simpson, National MP addressing the raft of changes proposed by the Government and explaining the National Party’s stance on the issues. Amongst the crowd were concerned employers, some worried about the effect of removing the 90-day trial period on their businesses, much like the person who posed the question to me at the conference.

One of the attendees spoke about their prior experience hiring people referred by Work and Income NZ and how the legislation de-risked this process.

They also went on to say that some of them were hired without interview. While I lauded their support of unemployed job-seekers and their willingness to give them employment opportunities, I did wonder – why wouldn’t you still interview them, at the very least?

Interestingly, Treasury back in 2017, when Bill English and the National Party were in power, did some research on the effectiveness of the 90-day trial period.

It found that: “While trial periods may have altered some firms’ behaviour at a micro level, the study was not able to find any significant economy-wide effect of the policy change on: The quantity of hiring; the probability that a new hire is a disadvantaged job seeker; the survival rate of new employment relationships; or employees’ willingness to change jobs.”

Essentially, this says that with, or without, this particular piece of legislation, we’re going to have the same issues. Don’t get me wrong – having it is a nice insurance policy for employers. If things go south with an employment relationship – it’s an easy fix, right?

However, think of the overall implications for your business if you invested more time and energy into your recruitment processes rather than relying on an exit clause.

Instead of hiring and firing quickly, do your due diligence effectively, undertake comprehensive reference checking, conduct thorough testing, get multiple people at different levels in the company involved in the hiring process and make sure they pass the no-dickhead policy!

Also, you do still have the option of a probationary period. This is a slightly different process to a trial period and whilst it requires more time and effort to manage, and the employer has a responsibility to follow fair process, it can provide a good opportunity for the employer to assess an employee’s skills and can allow a person new into a job demonstrate that they have the skills to work effectively.

Since the trial period was introduced, usage of the probationary period has become less common, but if used correctly, it can be an excellent framework to build open, honest and valuable communication through the initial term of employment, which can greatly improve staff retention and performance.

It can help create better managers and leaders. Employers can also set an appropriate length of time to assess new employees’ skills, which can be difficult to gauge in a three-month period.

While Scott Simpson, MP, has some very valid concerns on the proposed Employment Relations Amendment Bill, we can’t blame all our issues on government legislation.

There are many areas where we can take accountability for improving hiring practices, working smarter and investing in our people to create high-performing cultures, where 90-day trial periods are never mentioned post-hire.

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