You have probably heard it already. Everyone's talking about the 90-day trial period ending on the 6th of May, 2019. Some people are for it, while others are against it but everyone has an opinion about it.
The most important thing to remember is that this change doesn't apply to businesses with less than 20 employees; which means they can still include the 90-day trial clause in the employment agreement if they want to.
According to the Ministry of Business, Innovation and Employment, 97% of New Zealand businesses have less than 20 employees. This simply means that only a few Kiwi businesses will be affected by the new legislation.
But what about the businesses with 20 or more employees? And what about the new employees who are about to start working for such businesses?
Let's find out.
How will the new legislation affect employers
Ideally, a 90-day trial period should only be used to make sure that the candidate has the capability to perform their job or not, and shouldn't be used as a "hire and fire" strategy.
But since this is out of the picture now, employers with 20 or more employees should be aware of potential issues that might arise.
Here's how the new legislation will affect the employers:
- You, as an employer, will need to hire the right employees from the get-go. If it turns out that the employee is incompetent to do the job, you might have to go the 'performance review' or 'performance improvement plan' route and document everything to come to a conclusion, which can take a few months and cost a lot of money.
- Increased chances of employees claiming personal grievance, unjustifiable dismissal, or constructive dismissal, if things aren't working out as you expected and you decide to let them go because your relationship with the employee was deteriorating from the very beginning. You might be able to dismiss them for incompatibility, but you better have a really good reason, as firing an employee based on incompatibility is very rare.
- Since there's no 90-day trial period, chances are, the new employees might not feel the need to put their best foot forward and wow you.
- You will need a well-thought-out and comprehensive probationary period clause in the employment agreement to test the competency of the new employees. You should ideally strive to hire the best candidates in the first place, however, if you decide to let them go, you must follow a fair process.
How will the new legislation affect employees
If you've ever been employed under the 90-day trial period, you know how tough those 90 days are. You're constantly imagining the worst and hoping for the best - we've all been there.
However, if you get a job at a company with 20 or more employees, you don't have to worry about getting suddenly dismissed - well, unless you do something really nasty or don't perform well.
Here's how the new legislation will affect the employees:
- Expect a lot of questions and scrutiny during the hiring process. Employers that are subject to the modification in the 90-day trial period law will make sure they hire the 'right' candidate.
- Probationary periods are likely to be a part of your employment agreement. Employers will want to make sure that you can walk the talk, which is fair, given that they don't have the opportunity to test your competency for the first 90 days.
- Although we hope it doesn't happen, there are some chances of "sink or swim" attitude from both sides.
- If you want to leave your job at anytime during the first 90 days, be prepared to work long notice periods, which is usually 4 weeks but could be longer than that.