90-day trial period to provide job opportunities

Trial employment periods for up to 90 days for workplaces with fewer than 20 employees will be available from April 2009, the Minister of Labour, Hon Kate Wilkinson, announced today.

Legislation is being introduced to the House today and will be progressed through all stages.

"Across the board, the Government is moving decisively to mitigate the effects of the global economic troubles and position New Zealand for higher growth in the long term.  The 90-day trial period is an integral part of that response.

"By lowering the legal risks employers face, they will be more confident in giving people the opportunity to prove themselves," she says.

"Existing legislation exposes smaller businesses to the risk of costly employment action if an employment relationship does not work out, and discourages them from taking on new staff.

"For years small businesses have been calling for a trial period to solve this problem. The issue has previously been the subject of thorough consultation but real action has been stymied.

"The 90-day trial period will provide confidence for employers engaging new staff and allow struggling job-seekers to get their foot in the door, rather than languish on a benefit.

"Rigid employment law has the most damaging effect on people at the margins of the labour market. Long-term unemployed people, young people, people returning after absences for childrearing or sickness, people with disabilities or mental illness, migrants, people with overseas qualifications, and people with convictions all suffer disproportionately when employment law is inflexible.

"The 90-day trial will provide real opportunities for people at the margins of the labour market.

"We are encouraging beneficiaries to pursue employment opportunities and have ensured they are not disadvantaged for doing so. If a beneficiary enters a trial period and the job does not work out through no fault of their own, they will not face a stand-down before receiving the benefit again.

"We have listened to concerns raised previously and the Bill includes new safety mechanisms to protect workers.

"The trial period will also be covered by good faith provisions, meaning that employees will need to be fully informed about the trial period before agreeing to a trial period. Mediation will be available in cases of dispute.

"Employees will retain all other rights including those relating to pay, conditions, leave, and health and safety.

"Employees will still be able to take a personal grievance under the discrimination provisions of the Employment Relations Act through the Employment Relations Authority or Employment Court.

"This change brings us into line with the vast majority of OECD countries, where trial periods are an established part of employment law."

90-day trial period questions and answers:

Q: Is the trial period fixed at 90 days?

A: No.  The trial period can be any number of days up to and including 90 days.

Q: What does a 90 day trial period mean?

A: It means that an employer and employee can enter into an agreement that, for the specified and agreed number of days, the employer can dismiss the employee without the employee being able to take a personal grievance for reasons of unfair dismissal.  All other aspects of the Employment Relations Act 2000 still apply to that employment relationship.

The trial period is voluntary and needs to be entered into in good faith, and the employer and employee need to agree to the trial in writing.

Q: Why is the Government introducing a 90 day trial period?

A: Existing legislation exposes smaller businesses to the risk of costly employment action if an employment relationship does not work out, and discourages them from taking on new staff. Having a trial period available will enable small and medium enterprises to determine an employee's suitability for a job, without the risk of legal proceedings if the employment is terminated.

The 90 day trial will also allow people who are on the margins of the labour market greater employment opportunities. Such job seekers may include: youth, first-time workers, those returning to work after a period of unemployment or childrearing, those with disabilities and mental illness, migrants and those with overseas qualifications, and people with convictions. Employers will be more confident in giving these people a fair go and the opportunity to prove themselves.

Q: When will these provisions come into force?

A: It is intended that the provisions relating to trial periods will come into force on April 1, 2009.

Q: Why is this Bill being progressed under urgency?

A:  Across the board, the Government is moving to mitigate the effects of the global economic troubles and position New Zealand for higher growth in the long term. The 90 day trial period is an integral part of that response.

Q: What safety mechanisms are there to protect workers?

A: The good faith provisions of the Employment Relations Act 2000 will apply.

Remedies are available if employers act in a discriminatory manner or in the case of sexual or racial harassment. Employees will still be able to take a personal grievance under the discrimination provisions of the Employment Relations Act through the Employment Relations Authority or Employment Court.

Protections regarding pay, conditions, leave, and health and safety are unaffected by employment in a trial period.

The Bill also ensures that an employer and an employee may only agree to a trial period once.  So if the employment relationship ends and the employee is subsequently re-employed, the option of a trial period will not be available.

Q: What if the employee leaves because they have been discriminated against - e.g. the recent case involving the pregnant workers?

A: Employees will still be able to take a personal grievance under the discrimination provisions of the Employment Relations Act through the Employment Relations Authority or Employment Court.

Q: What about beneficiaries, will their stand-down period be affected?

A: Employees on a trial period, if they were previously on a benefit or if they receive assistance post-redundancy in a new package to be announced before Christmas by the Minister of Social Development, will not face a stand-down if they go back on a benefit or onto the post-redundancy assistance, unless they have been dismissed for misconduct, or have chosen to end the trial themselves without a good reason

Q: What businesses will be able to employ people on a trial period?

A: It will be available to businesses with fewer than 20 employees.

Q: If employees can't go to the Employment Relations Authority or the Employment Court and they believe they were dismissed unfairly who can they turn to?

A: They can still use the Department of Labour's Mediation Services.

Q: What is the effect of the Kiwisaver changes in the Bill?

A: These changes repeal the amendments introduced by the previous Government, and are required as a consequence of changes made to the Kiwisaver Act.