No backing to extend 90-day hiring trial

17:00, Aug 09 2014

Business New Zealand's push for an extension to the 90-day hiring trial lacks support from either National or Labour.

Business NZ chief executive Phil O'Reilly said he had spoken to both parties about extending the trial period from 90 days to six months or a year, which is in line with many other OECD countries (see graphic). But he said neither party had shown an appetite for introducing such a move prior to the election, if at all, and it would be something the business lobby group would raise again post-election, along with other issues outlined in its policy manifesto released last week.

Labour Minister Simon Bridges said while the trial had worked, National didn't think it was necessary to extend it beyond 90 days. The focus, he said, for a National government if re-elected would be pushing through as soon as it could other industrial law reform via the Employment Relations Amendment Bill. The bill, which provides more flexibility around collective bargaining, meal breaks, and Part6A which covers the protection of workers in takeovers, is opposed by unions.

When extending the 90-day hiring trial to all businesses in 2011, the Government said it was confident that 90 days had proved sufficient for employers to judge whether an employee was 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," it said.

Labour leader David Cunliffee said last week the 90-day hire and fire rule was "being fired" because it was not right and not fair. He said it would still be possible under some circumstances though to have some sort of probationary hire providing it wasn't automatically 90 days.

But O'Reilly said there was strong support from small businesses in particular, he said, to extend the trial period because they typically had no human resource department as larger companies do to help them make hiring decisions.


‘This impacts their decision to hire. If they feel there is a risk to hiring they either won't or will delay the decision to hire or they hire safe and won't give a young person a chance, they'll go for the middle-aged white man," O'Reilly said.

When asked why it would take longer than 90 days to assess whether an employee was worth retaining, O'Reilly said for lower level jobs 90 days might be sufficient but more senior positions in small businesses could take longer to assess and their impact on the business if the owner got it wrong was significant. Some OECD countries that do allow extended hiring trial periods limit it to those earning more or white collar workers.

A Ministry of Business and Innovation evaluation of the Employment Act change released in June found the main reason it was being used by a wide range of companies for varying positions was to help manage risk when trialling new staff. A national survey of employers in 2012/2013 found 72 per cent of employers that had used trial periods had not dismissed an employee during the 90 days while 27 per cent had dismissed at least one employee during or after the trial.

Critics claim employers can simply take on people and then fire them before the end of the 90 days without good reason and that the rule was a poor replacement for good hiring processes. Council of Trade Unions boss Helen Kelly said the law change had been a disaster and extending it further would only further damage worker rights.

"In our office we've had worker after worker who have been badly treated and destroyed by that bad treatment," she said. "It allows employers to sack people who raise legitimate issues and takes away the power from people when bargaining at the interview stage."

One of the main objectives of trial periods was to create more employment, especially for disadvantaged job seekers. MBIE's survey found about a third of employers had hired someone they would not have otherwise hired but there was no evidence there had been a net lift overall in job numbers. The CTU said there was no evidence that it had helped those it intended to with the number of 20 to 24 year olds not in work increasing in the past year.


Auckland-based Permark Industries has factories in Auckland and Christchurch and two sales offices in Australia. Co-owner David Jack estimated using the clause on 95 per cent of new hires since the law came in, through more often on blue collar workers and those who had been out of work for a while or had a chequered work history than those who were leaving another job to apply for the new one. Permark has only dismissed two people at the end of the trial period, he said, as they had not turned out to be satisfactory workers. Jack said the trial period had made the hiring process a lot easier rather than increased the number of people it employed. "It has let us hire a person we may not have otherwise hired. It has allowed us to hire people without good work experience and get them into a position where they can get that work experience." But Jack doesn't support extending the trial period beyond 90 days, saying "you should know by then" whether or not you wanted to retain someone. 

Sunday Star Times