90 day trials

The best thing about the Government’s decision to extend the option of 90 day grievance periods to all employers, is that the unions have planned a protest today outside the National Party conference.

Many delegates had lamented how much they miss the traditional protests outside, so thanks to the CTU for going to the effort to organise one.

Turning to the merits of the policy, I would commend to readers a copy of the DOL report into the current 90 day grievance free period for small employers. Not online yet, but expect will be on DOL website on Monday. Some key facts from their survey:

• Half of the employers who had hired someone since 1 March 2009 had used a trial period for at least one employee.
• 74% of those in a trial period retained their employment, 5% were still in the trial period and 22% were let go.
• In relation to the last employee hired on a trial period, 40% of employers said they would not (or likely would not) have hired that person without a trial period!!

That last paragraph is staggering, and shows how important the trial periods have been for convincing employers to take on extra staff. With the risk of being lumbered with an unsuitable staff member diminished, many more employers are willing to expand.

43% of those on trial periods were aged under 25, and this makes sense – it is employees with relatively little experience and skills who are the biggest gamble for an employer, and stand to benefit most. Of course one also need to delink the youth minimum wage from the adult one.

What I also found interesting is that a third of those dismissed during the 90 day trial period were let go within two weeks. This indicates that it becomes absolutely clear within days that the person has hired is just clearly not up to the job. Anyone who has been an employer knows this problem.

It costs considerable money and time for employers to employ staff. They want new staff to stay on if they can do the job.  But sometimes (and it seems to be around 1 in 10 of all new staff) they clearly show they are either lacking the skills or the temperament to be a productive member of a team, and the trial period allows the employment relationship to be halted without forcing the employer into spending tens of thousands of dollars on an employee who never contributed much of value to the business (it generally takes some months for new employees to come up to full speed).

At the end of the day, remember that 40% figure. 40% of those on trial periods would probably not have been offered jobs at all, if the 90 day law had not been passed.

The Herald on Sunday editorial concludes:

Anything that encourages an employer to take a punt on a new worker – and in particular to give a chance to someone who shows promise but lacks credentials – must be worth trying. It defies common sense that cost-conscious bosses will casually sack someone they have spent three months training. …

But in opposing the extension of the trial scheme unions seem more driven by ideology than good sense.

How unusual!