90 Day Trial Period – Extension!

Changes to the Holidays Act 2003 and the Employment Relations Act 2000 have now passed their third reading and are law, effective from 1 April, 2011.

There has been a lot of discussion around the extension of the 90 day trial period for new employees to all employers.  Since April 2009, employers with fewer than 20 staff have been able to take these staff on using a 90 day trial period. These employees can then be dismissed within this 90 day period without the ability to raise a personal grievance for unjustified dismissal.  What remains is the employee’s ability to bring a personal grievance on other grounds including discrimination, harassment or unjustified disadvantage or employers who have not been operating out of a duty of good faith.

Recent research from the Department of Labour showed that up to 40% of employers who had hired someone on a trial period said it was unlikely they would have taken on new employees without this facility.  So far, there has been only one case brought to the Employment Relations Court in relation to a trial period.  This case highlighted that an employer must use a trial period fairly and that there was still protection for employees hired under this scheme and at the same time should not be used as a way of isolating employees.  The extension to all employers with the new legislation is, in our view unlikely to be widely abused. The time and cost of recruitment and the benefits of staff retention suggest that employers have a strong interest in using the new provisions responsibly.

Another law change that will also take effect from 1 April, 2011 is the ability for employees to cash in a maximum of one week of annual holidays. However, this provision must not become a term or condition of the employee’s employment.

Polson Higgs recommends that you think carefully when drawing up your individual employment agreements in relation to imposing trial periods and would be happy to provide any assistance in engaging staff.

For more information, please contact:

Ross Hanson
Human Resources Leader and Senior Consultant

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 Last updated:    Thursday, 27 January 2011 |   9:33:42 a.m.