SME owners love 90-day hiring trial

20:01, Aug 18 2014
Maria Slade
Maria Slade

I was asked recently if Unlimited would do any political coverage in the run-up to the general election.

My instinctive response was no - because Unlimited is a business magazine, and New Zealand firms by-and-large don’t care who’s in government.

Sure, business bosses lean to the right, and issues such as tax, compliance costs and R&D spend obviously affect them. But the vast majority of governmental processes churn on regardless of who’s in the Beehive, and any changes a new crowd might make would be little more than tinkering.

Even the Labour Party’s proposed $2 hike in the minimum wage concerns few, as most companies don’t pay the basic wage.

One policy touches them all, however. As sure as flannelette pyjamas kill passion in the bedroom, so too removing the 90-day trial employment period will harden the hearts of employers.

Businesses bloody love the 90-day rule. They see it as a godsend, giving them the confidence to take a chance on a new hire, and certainly they’re using it - the most recent figures show 69,000 employers hired 131,000 employees on a trial period in 2012.


Some would say that’s 131,000 people who may not otherwise have got a job. Others argue that the 27 per cent of firms who let someone go within the 90 days equates to at least t 18,000 hardworking Kiwis dismissed for no good reason.

Hiring is a minefield. You can psychometrially test people up the wazoo, but when push comes to shove you’ve got to go with your gut. Auckland commercial lawyer Steven Dukeson commented on a recent LinkedIn post that although he’s pretty good at reading people, one ‘‘employee from hell’’ got past him.

‘‘They were referred by an agency and there was no sign of their weird personality during the interview process or of some other issues that arose.’’

While these people are the exception, a more common problem is what Dukeson calls the ‘‘incompatible’’ employee - the one who ‘‘does the minimum work required, not especially well but not badly, doesn’t fit, doesn’t get on, always some problem’’.

When you’re a small company employing a handful of people someone like this is a dead weight. Firms need the ability to deal with them.

There is scant evidence the 90-day rule is being abused. Where issues arise it’s often because it hasn’t been applied correctly.

Take the case of cafe worker Davide Fagotti, who worked an eight-hour trial shift at the Prefab cafe in central Wellington and joined full-time two weeks later. He was sacked the following month with no reason given.

The Employment Relations Authority found that the earlier trial shift meant Fagotti was previously employed at Prefab, and therefore could not be placed on a trial period.

Firms also seem to regularly overlook the fact that they must make a 90-day trial a condition in the employment contract, and that the contract must be signed before the person starts work.

After five years employers should be embarrassed there’s still so much misunderstanding of the rules. But there is no problem with the law itself, other than perhaps a need for greater education.

So, politicians take note - you may do many things to the employment landscape, but if you want businesses to love you at all step away from the 90 days.