Shaneel Lal: Government tampering with the rights of employees with 90-day trials

Minister of Workplace Relations and Safety Brooke van Velden. Photo / Alex Burton

OPINION

The Government extended 90-day trial periods to all employers under urgency before Christmas.

An employer with fewer than 20 employees can use a trial period of up to 90 days by inserting it in the employment agreement. In the trial period, the employer, with notice, may dismiss the employee without providing any reason or giving the employee a chance to fight the dismissal.

Minister of Workplace Relations and Safety Brooke van Velden claimed that “by extending 90-day trials to all businesses, not just those with fewer than 20 employees, we’re giving all businesses greater confidence to employ more New Zealanders.”

Turns out, a Treasury-commissioned report in 2016 found “no evidence that the ability to use trial periods significantly increases firms’ overall hiring”.

Van Velden also claims, “The extension of 90-day trials also provides greater opportunities for employees. They allow employers to employ someone who might not tick all the boxes in terms of skills and experience but who has the right attitude”, but the same Treasury-commissioned report found “no evidence that the policy increased the probability that a new hire by a firm was a disadvantaged jobseeker”.

The Government has not presented evidence that 90-day trial periods will either increase overall hiring or the hiring of unskilled or disadvantaged people.

NZ Council of Trade Unions President Richard Wagstaff said, “90-day trials are not a mechanism to make hiring workers easier. They only make it easier for businesses to fire them.” This view isn’t unreasonable, given the Government is hyper-focused on how 90-day trials will reduce the time and cost of firing employees.

The Treasury-commissioned report found “The main benefit of the policy was a decrease in dismissal costs for firms”, and van Velden emphasised “bringing on any new employee costs time, it costs money”, and 90-day trials remove the “costly dismissal process”.

That’s it.

Ninety-day trials hand employers more ability to exploit workers. For example, an employer in retail or hospitality can hire an employee before the holiday season under the pretence of giving them long-term employment after 90 days but fire them for no reason after the holiday season, even if the employee is the best in the workplace. The employee has no rights if the employer follows the appropriate dismissal notice requirements.

If the issue is the dismissal process, van Velden should fix the dismissal process to allow employers to dismiss employees who are not fit for the job. But the Government is universally tampering with the rights of employees irrespective of how diligent they are at work and giving employers, the more powerful party in the employment relationship, even more power to act to the detriment of workers for monetary gain. Why shouldn’t an employer be required to give a reason for firing an employee?

Van Velden may pretend bringing back 90-day trials for all employers is a positive for employees, but, to me, all the evidence is stacked against her. In fact, research has found that not only are 90-day trials useless at increasing hiring, but they make it cheaper and faster for employers to fire employees and the Treasury-commissioned report found “many employees faced increased uncertainty about their job security for three months after being hired”.