Restoration of 90-day trial a Christmas gift for all businesses

This story was updated at 1.30 pm on Friday, December 22, 2023

Venkat Raman
Auckland, December 21, 2023

Medium and large business owners received their Christmas Gift today as the New Zealand Parliament ratified legislation restoring 90-day trial period for all employers.

The Employment Relations (Trial Periods) Amendment Bill will enable all businesses in the country to enforce a trial period of 90 days applicable to all employment contracts. Until now, only companies employing less than 20 workers were entitled to this option.

It will become law as soon as the Governor-General gives her accent and is published as such in the Official Gazette.

National and ACT Parties had campaigned on this issue, promising voters to bring back the 90-day trial period to all companies within the first 100 days of forming the government.

Equity among employers

Workplace Relations and Safety Minister and ACT Party Deputy Leader Brooke van Velden spearheaded the Amendment saying that the Amendment Bill would bring equity among employers and help them to improve employee relations.

“About 72% of all employees in New Zealand are employed by businesses with 20 or more workers. We have heard loud and clear from these businesses; that they want 90-day trials back. By giving all businesses, not just those with fewer than 20 staff, the confidence to take a chance on a new employee without the risk of a costly dismissal process we enable more New Zealanders to find fulfilling work,” she said.

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According to Ms van Velden, the Bill will benefit people who are beginning their careers, and workers who are getting back to employment and those changing their careers. Workers who might be considered risky, with little work experience or a criminal background, will also benefit from this Bill.

“It only takes one employee with a poor attitude or who simply does not have the skills to perform their duties to take down an otherwise productive team. 90-day trials give employers much-needed certainty to make decisions and get ahead. Extending the availability of 90-day trials does not mean that all new employees will have trial conditions, rather it provides the option to include trial periods in employment agreements in the future,” she said.

Significant difference in relations

The 90-day trial period provides an option for employers as well as those seeking employment to end the employment contract without assigning reasons within the first 90 days of the contract.

Ms van Velden said that the trial period made a significant difference to the labour market, encouraging businesses to hire people.

“It was important to give employers and employees certainty about the labour market before next year. Retaining an employee who is a poor fit is not just costly to the business in terms of the dismissal process, but costly in terms of the whole culture of that workplace. The costs and risks of dismissal could lead to fewer employment opportunities for jobseekers,” she said.

The three opposition Parties- Labour, Greens and Maori were not impressed.

Labour’s Workplace Relations and Safety Spokesperson Camilla Belich quoted the findings of a Study commissioned by the Treasury under the John Key government in October 2016 and said that there was no evidence of benefits accrued by trial periods.

“The Study did not find evidence that the policy increased the probability that a new hire by a firm was a disadvantaged jobseeker

The law did not appear to affect the likelihood of new hires remaining in the long term, or make workers less likely to move jobs,” she said.

She accused the new Coalition government of ‘hating working people.’

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