New research by the Department of Labour shows more employers are using the 90-day trial period to reduce the risk of taking on new employees.
The research is based on the findings of a national survey of around 2000 employers plus qualitative interviews with 53 employers from the retail, hospitality, agriculture, forestry and fishing, and manufacturing industries.
“Our latest research shows that 60% of hiring employers are now using the trial periods, and even more intend to use it in the future,” Department of Labour research centre manager Vasantha Krishnan says.
Since 1 April 2011, an amendment to the Employment Relations Act 2000 allows all businesses to hire new employees on a trial period of up to 90 calendar days. Prior to this, employers with fewer than 20 employees were able to use the provision from 1 March 2009.
The research found:
• There has been an increase in the number of hiring employers using the trial period from 49% in 2010 to 60% in the latest survey. There is not a significant difference between the level of use in SMEs and larger employers.
• Trial periods have improved employment opportunities – 41% of employers in the national survey said they would not have hired their most recent employee without a trial period.
• Eighty percent of employers in the survey reported they had continued employing staff once the trial period had ended. This is similar to the level found in the 2010 evaluation of trial periods in SMEs.
• Youth and long-term unemployed are benefitting. Respondents to the qualitative interviews said trial periods were one of the key government initiatives that had improved their willingness to hire applicants from these groups – due to reduction of risk.
• Employers use trial periods to address risk when hiring, for example: to check an employee’s ability for the job before making a commitment to employ permanently (66%); to employ someone with the skills required, but where the business is unsure about their ‘fit’ with the workplace (35%); to avoid incurring costs if staff are unsuitable for the job (13%).
• Some employers use trial periods to test the viability of a position (rather than person) within the business. This is more likely in SMEs (30%), compared with 17% for larger employers.
Under the amendment to the Employment Relations Act, an employee, if dismissed within the 90 days’ trial period, is unable to raise a personal grievance for reasons of unjustified dismissal, but still has the right to protections against discrimination, sexual and racial harassment, duress or unjustified action by the employer. Employees are still able to access mediation, and the principle of good faith still applies to the relationship.
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