Trial periods were introduced by the National government in 2009. Broadly, where an employment agreement includes a trial period, the employee cannot bring a personal grievance for unjustified dismissal for up to the first 90 days of employment. The rationale for introducing trial periods was simple enough: to give employers confidence to take a risk on employees they may have otherwise been reluctant to employ. Trial periods can only be used for new employees and initially only employers with fewer than 20 employees could use trial periods. However, this was extended to apply to all employers in 2011.
The Employment Relations Authority and the Employment Court were quick to point out that trial periods removed long held employment rights and determined to interpret the relevant provisions strictly. As such, employers wishing to rely on a trial period need to ensure that the trial period is valid and that it is agreed prior to the employee starting work.
Labour and the trade unions initially opposed trial periods arguing, among other things, that trial periods would allow employers to opt out of the requirement to treat employees fairly. However, Labour appears committed to retaining trial periods but has indicated that the law will be changed to make them fairer for employees. Specifically, Labour campaigned to change the existing law so employees could challenge dismissal during the trial period. Labour said this would be achieved by establishing a new referee service specifically to deal with claims of unjustified dismissal during the trial period. The referee would preside over a hearing and would have the power to either reinstate the employee or award damages up to a fixed sum. Lawyers would not be allowed to attend and the service would be provided free to the parties.
If the new Labour led government does introduce the above change, it is difficult to see why employers would bother with trial periods. The risk of having to pay the employee a sum of money or worse, the employee being reinstated will surely mean that trial periods lose their attractiveness.
Whether this change is made and what it finally looks like is not yet certain.