90-Day Trial Period extended to all employers

  • Kate Wilkinson

The 90-day trial period is to be extended to enable all employers and new employees to have the chance to benefit from it, says Minister of Labour Kate Wilkinson.

The extension is among planned changes to the Employment Relations Act 2000 that Prime Minister John Key announced today in a speech to the National Party Conference.

"The Government is focused on growing a stronger economy and creating more jobs for New Zealand families," says Ms Wilkinson.

"There are a lot of people looking for work and the changes announced today will help boost employer confidence and encourage them to take on more staff."

Ms Wilkinson says a Department of Labour evaluation of the trial period showed it had been beneficial for both employers and employees.

"The evaluation showed that 40 percent of employers who had hired someone on a trial period said it was unlikely they would have taken on new employees without it.

"Trial periods were introduced to encourage employers to take on new staff and I'm pleased to see this is occurring.

"It's also great to see that by far the majority - at least 74 percent - of people employed on a trial period have maintained their employment. It's clear this law is a win-win for employers and employees. Extending it will give all employers and potential employees the chance to benefit from it."

Further changes to the Employment Relations Act include:

  • Promoting mediation by providing that the Employment Relations Authority gives priority to mediated cases;
  • Developing a Code of Professional Conduct for employment representatives;
  • Enabling Authority members to throw out frivolous or vexatious cases at an early stage;
  • Allowing Authority members to award penalties against parties who fail to attend investigation meetings without good cause; and
  • Modifying the test of justification in s103A of the Act.

Rules on union access to workplaces will also change so any access will require the consent of the employer - but consent may not be unreasonably withheld.

"The Government is committed to an employment relations system that helps employers and employees resolve disputes quickly and inexpensively," says Ms Wilkinson.

"While the current system generally works well, it can prove time-consuming and costly. The changes announced today will reduce costs by providing a more efficient system while maintaining fairness.

"The Act Party has taken a close interest in these changes and I want to thank them for their valuable input." 

A Bill amending the Employment Relations Act 2000 is being drafted for introduction this year.

Note: Please find attached a backgrounder on the ER Act changes and the Department of Labour report: Trial Employment Periods: An Evaluation of the First Year of Operation. A copy can also be found at www.dol.govt.nz/publications/research/trial-periods/.


Questions and answers:

Why is the 90-Day trial being extended?

It has encouraged employers to take on new staff and helped those at the margins of the labour market, particularly young people, get jobs. The Government considers that all employers and jobseekers should have the chance to benefit from the positive outcomes the law has brought.

How successful has it been?

A Department of Labour evaluation of the first year of the 90-day trial period showed that out of 989 employers surveyed, 57 percent had hired staff since 1 March 2009. Of those, half had used a trial period when hiring at least one employee. 74 percent of employees employed on a trial period continued to be employed after the trial period ended. Of employers surveyed, 40 percent said it was unlikely they would have hired without the trial period.

Why not extend the trial period from a maximum of 90 days to six months or a year, as is the case overseas?

The Government is confident that 90 days has proved sufficient for employers to judge whether an employee is capable of or suited to a job. Internationally, developed countries have opted for longer trial periods but feedback we have received suggests most New Zealand employers can effectively evaluate an employee's suitability within the first three months. 

Why are some of the rules relating to personal grievances being changed?

There has been criticism that the current law is focussed too much on process and not enough on ensuring the right outcome. Decisions to dismiss are sometimes overturned because of what appear to be small defects in the employer's process. Specifying minimum requirements for a fair and reasonable process - combined with the development of a Code of Employment Practice around discipline and dismissals - will create more certainty.

What is being done to address problems with ‘no win no fee' and other advocates' behaviour?

The Department of Labour will work with employment representatives to develop a code of professional conduct. This will help improve the professional standards of those engaged in grievance processes. The Employment Relations Authority will also be given greater discretion to dismiss frivolous cases.

Why will reinstatement no longer be the primary remedy in dismissal cases?

Parties in many dismissal cases no longer seek reinstatement. Often in such cases the employment relationship has deteriorated to such an extent it is no longer a practical option. This change recognises that reality.

Why is the role of Labour Inspectors being redefined?

Currently the work of Labour Inspectors is not defined in statute.

The role of Labour Inspectors will be defined as being to investigate complaints and support businesses to achieve compliant practices and systems.

Why are Labour Inspectors' powers being increased?

Inspectors will have a wider range of tools and will allow them to enter into agreements with employers. Improvement notices are similar to notices that inspectors can issue under the Health and Safety in Employment Act 1992. Enabling Labour Inspectors to seek penalty action for non-production of employment agreements reinforces the importance of written employment agreements in employment relationships.

Why are the rules relating to union access to workplaces being changed?

The Government considers that employers need to have control over who enters workplaces. This is for a number of reasons, including health and safety and the need to retain productivity. In practice, most union officials give advance notice of their intention to visit workplaces and visits take place with little or no disruption. However, employers want reassurance that they can decline or reschedule visits that may disrupt business activities.  The law change gives that reassurance but does not permit a blank refusal of all requests - thus the interests of unions and employees continue to be protected.

What is behind the clarification of rules relating to employers communicating with employees during collective bargaining?

Many employers believe the law does not permit them to talk to their employees while collective bargaining is underway. They believe that if a settlement offer is made they cannot talk about it to their staff. Clarifying the law will ensure that employers (and employees) will know where they stand. Any communications will have to be consistent with the employer's duty of good faith under the Act.

What happens next?

Legislation to enact the changes is being drafted and will be introduced into Parliament shortly.

Will I have a say?

The legislation will be referred to a select committee which will call for public submissions.

When are the changes likely to become law?

The Government has agreed to give the legislation priority.  An enactment date will be announced as the Bill progresses through Parliament.