KEY POINTS:
In many avenues of life, trial periods are common. They have proved a durable means of heightening the chances of all parties being satisfied with a transaction. Expanding that concept to employment seems a logical enough step. The National Party tried to do this in 2006 through a member's bill that would have introduced a 90-day probation period for new employees in small businesses. It failed when the Maori Party withdrew its support. Now, it has emerged as a key point of National's industrial relations policy, which otherwise retains the core of the Employment Relations Act. This perseverance should be welcomed not only by employers but the many people who stand to have a better chance of gaining a job.
The Government and the trade union movement do not see it that way. Labour Minister Trevor Mallard described it as "almost a charter for people to abuse newly appointed low-wage workers". Such an interpretation betrays either a misunderstanding or an extremely cynical view of the aims and intentions of most employers. Why would they use it to sack employees without good reason when good staff are hard to find and much time and effort is put into training them?
A more rational take on the proposed law is that it will encourage employers to give people a chance to show they can do a job. Most advantaged by this will be those who employers might otherwise be reluctant to recruit - the likes of new immigrants without good English, former prisoners, those wishing to change careers, young people without qualifications, and those with no recent work experience. National's proposal would allow employers to take a chance knowing there will not be the prospect of complex and costly personal grievance procedures if there is a genuine problem.
This freedom has long been sought by small businesses. It was pinpointed as the "single most important change needed in employment law" by the Small Business Advisory Group, which was set up by the Government in 2003. The group identified employers' fear of hiring new workers as a significant obstacle to business growth. It was not advice that the Government was keen to hear. It notes that probationary periods are already allowed under existing law. But any agreement between employer and employee does not change any of the law relating to unjustifiable dismissal. Workers can still take a personal grievance if they believe the decision not to keep them on is unfair.
That means there is no practical change. Dismissing a worker who, for whatever reason, has not performed as expected can take a very long time. Employers must go to the trouble of monitoring staff and giving them areas for improvement before they can be let go. That, in turn, has created much work for the Employment Court, most of it dealing with employers' failure to follow the strict procedures laid down for dismissal, rather than the performance of a particular employee.
When National's member's bill was before Parliament two years ago, trade unions staged public demonstrations, terming it an intolerable attack on workers' rights. In fact, New Zealand is the only OECD nation, apart from Denmark, that does not have a legal probationary period in some shape or form. Other countries have recognised the advantages to both parties.
Employees, who already have the right to withdraw their services without incurring claims for compensation, will more readily be granted the chance to show what they can do. Employers, for their part, can correct a recruitment error without risking the wrath of personal grievance claims for unjustified dismissal. It is a win-win situation - as, indeed, is the case with all trial periods.
