Kate Ross: Will the 90 Day trial period make a difference?

Kate Ross. Photo / Supplied

The New Year heralds some noticeable changes in how we employee staff and take care of business.

One of the key changes in the Employment Relations Act 2000 introduced in March 2009 was on how we employee staff. The new 90 Day Trial Period allowed business owners to take on new staff in good faith for an agreed number of days (no more than 90 calendar days).

If the trial period does not work out for either party, the employer is able to use the provision of the Trial Period clause in the agreement to end the employment relationship, without the employee being able to take a personal grievance for reasons of unjustified dismissal. The ability to offer a 90 Day Trial Period applied only to businesses employing 19 employees or less.

On April 1 of this year, the ability to offer a 90 Day Trial Period to new employees will be extended to all employers including those with 20 or more employees. The existing conditions for trial periods still apply.

For employers, the intention of this policy is to improve prospects in the labour market by providing a flexible and encouraging work environment for businesses to take on new staff. The key benefit of this change coming into force in April is that larger businesses will have more confidence in hiring new employees.

However, the 90 Day Trial Period should not be used in lieu of good employment practices. Stringent recruitment processes and finding the right person for your business are as important as ever, and the Trial Period clause should not be used as reason to overlook this.

For employees, this change provides staff with the opportunity to gain workplace experience and showcase their skills and capabilities in larger businesses, within a tight labour market. For new staff offered a Trial Period, it is important to remember that this clause is voluntary and that you can choose to accept it or not.

Other changes coming into force in April include changes to the Holidays Act 2003 and how holidays are treated. One of the key changes for employers is the pay out of up to one week of an employee's minimum annual holiday entitlement in any year, at the employee's request.

Keeping abreast of changes affecting how employers take care of their staff and their business interests is a key responsibility for all business owners. Communicating how these changes affect individual staff is also part of the process. For full details of these changes and other amendments coming taking effect in April relating to the Holidays Act 2003 and the Employment Relations Act 2000, go to the Department of Labour Website for free advice or call their Hotline.

We also went out to our clients and asked this their thoughts on the 90 Day Trial Period. Some thoughts:

Client: We believe that the 90 Day Trial provision will be of use to our organisation. We find that many of the extreme cases of poor performance and/or behaviour do become evident within the first 90 days of employment - sometimes within the first ten. So we will be endeavouring to put this into our policies and employment agreements.

Having said that, we do not see this as the "morning after pill". We still intend to apply appropriate recruitment practices to ensure correct recruiting decisions are made in the first place. We place a great deal of emphasis on recruitment analysis and decision-making. The 90 day trial does not mean an excuse for poor practice.

Client: We are also well aware of the cost of recruitment and the resulting loss of productivity. We have no intention, as the unions might have us believe, to continuously churn people over at 89 days. This would be totally counter-productive and illogical. We are very conscious of maintaining our reputation as a good employer in an increasingly tight labour market.

We would operate the trial period process under well controlled policy and practice. We do not take decisions to dismiss staff lightly, and this would not change under a 90 day trial. We will be establishing proper processes to ensure good faith discussions have taken place, and we will expect our managers to involve their manager and HR before any decision to dismiss is made. We would expect to see documented evidence of good dialogue between the manager and the employee throughout the process.

Client: In this way, the 90 day trial system may actually force employers to have better discussions with staff, earlier.

Client: We will not be adding the 90 day probation period to our employment agreements. We feel we have strong and robust recruitment processes in place and will not need to add the clause.

Client: Personally, I think it is a good thing, not just for our company, but in the cases where perhaps a candidate is not given an opportunity in other circumstances. If something like that does come in for us, as a company and a brand it is not a reason for us to drop the quality of our recruitment; we do not want to get the reputation of bringing someone on and then bounce them, it will not change anything for us. We are all well versed on the process that we need to follow for any issues, but also have confidence in the staff that we hire.

Clients also commented that it doesn't fix the situation where someone who is currently employed leaves their role to move into a new position on a 90 day probation period. Employers will struggle to convince a candidate to agree to this as why would candidates leave the security of an existing role?

Also, hasn't this been operating in reality already? There are countless situations where organisations take on a candidate as a temp or contractor and then offer them a permanent role when they have proved themselves.

What the 90 Day Trial Period is doing is essentially legalising the practice. The question is: how many new roles will this create?