Venu Menon
Wellington, December 22,2023
The National-led coalition government is battling the perception among a segment of New Zealanders of being “anti-worker,” following the passage of the legislation reinstating 90-day trials for all businesses.
The Employment Relations (Trial Periods) Amendment Bill, passed in Parliament on 21 December 2023 and awaiting Royal assent by the Governor General, delivers on the government’s commitment to extend the availability of 90-day trials to all businesses and is part of its 100-day plan.
But the legislation has polarised opinion by its perceived stress on safeguarding the interests of employers over those of employees.
Previously, the 90-day trial period applied only to businesses employing up to 19 workers.
The government has argued “around 72 per cent of all employees in New Zealand are employed by businesses with 20 or more workers” and that they “want 90-day trials back.”
The new law is being hailed by businesses for removing the risk of a “costly dismissal process” and giving them the “confidence to take a chance on a new employee.”
These include “workers who are just starting out, those who have taken a break from working or people looking to change careers,” as well as workers “who might be considered risky, with little work experience or a criminal background,” as per a statement by Workplace Relations and Safety Minister Brooke van Velden.
A key rationale is to bring certainty for employers and employees and provide a fillip to the labour market.
Under urgency
But the government’s first stumble came when it backtracked on its commitment to send the legislation to a select committee of Parliament.
Instead, the Bill was passed through all stages under urgency.
The absence of select committee scrutiny has exposed the centre-right government to the charge of acting in “reckless haste” to undermine protections for workers.
Workers’ bodies such as the Council of Trade Unions lost no time in denouncing the government’s move, saying the fundamental protections for workers were being removed with “indecent haste.”
The government is having to shake off the perception that its values are not aligned to those of the working class.
Double whammy
Workers lobbies are apt to club the trial period policy with the government’s recent rollback of Fair Pay agreements and see a concerted drive to disempower workers by first scuttling their collective bargaining power to negotiate better pay deals and then following that up by leaving new workers defenceless against arbitrary dismissal.
Imbalance in the workplace
This introduces an imbalance in workplace equations between employers and workers, denying scope for new workers to make out personal grievances on merits without risking their jobs.
Backdrop
In March 2009, the Employment Relations Act (2000) was amended to allow firms with fewer than 20 employees to have 90-day trial periods for employees.
The step was aimed at alleviating costs to small firms struggling in a global recession.
In April 2011, trial periods were extended to all businesses.
Research findings
A 2016 Treasury-commissioned research, invoked by the opposition parties in Parliament this week, finds no evidence to show any correlation between trial periods and “overall hiring.”
The study finds the policy is not backed by evidence to show that new hires are disadvantaged jobseekers falling under the categories of beneficiaries, jobseeker beneficiaries, non-workers, recent migrants, youth aged under 25 years, Maori or Pasifika aged under 25 years, or education leavers.
This finding applies also to “high-use” sectors such as construction and wholesale trade.
Treasury’s research findings point to “no evidence that the policy [of 90-day trials] had an economically significant effect on the quantity of hiring by firms on average across industries.”
The research notes industries such as construction and wholesale trade, where trial periods are in “high use,” show “statistically weak evidence that trial period policy could have increased new hiring in these industries by around 10 per cent.”
This trend, however, is not apparent in sectors such as education and training, where trial periods are in low use.
Notably, the research finds that both across industries and in high-use industries, “we see no evidence that trial period policy altered the probability that an individual hired by a firm with at least 15 employees was young, a recent education leaver, a recent migrant, a recent beneficiary, a young Maori or Pasifika, or a person who had not worked in the preceding year.”
The research adds workers do not tend to stay longer in jobs on account of the trial periods.
But the policy also does not deter job seekers from moving to firms with the 90-day trial period.
In other words, the correlation between the period policy and the hiring or firing behaviour of firms is “economically insignificant,” with little impact on the broader economy.
But what worries sceptics of the policy is that the right to fire at will, and without reason, leaves new workers vulnerable to exploitation, leading to job insecurity.
Venu Menon is an Indian Newslink reporter based in Wellington
