Could the 90-day trial law be bad for business?

Thursday 17 September 2015, 11:25AM
By Donna Miles-Mojab

Let’s face it, the only reason that the leader of the Labour party, Andrew Little, is not prepared to outright reject the 90-day trial employment law is because the majority of employers consider it beneficial to their business.

But what if the 90-day trial law, just like that one-glass-of-red-wine-per-day that we thought was good for us, turned out to be damaging to the health of our businesses?

My own observations, and close involvement with a successful business for nearly 10 years, have convinced me that what employers regard as a useful instrument could in fact prove as a barrier for some businesses.

Anyone with a failed recruitment experience would acknowledge that having to repeat the process is a considerable financial drain on the business.

So, the challenge is to get it right the first time and I strongly believe that the most effective way of facing this challenge is to encourage businesses to develop robust and effective recruitment processes rather than encouraging them to take a gamble by allowing a 90-day trial period.

Having to develop an effective recruitment strategy forces the employers to think more carefully about the required core competencies of the various roles within their business and how those competencies can be measured and tested.

The knowledge produced and captured through this process is extremely useful in gaining a full understanding of the sum of the parts that produce tangible business results.

Businesses that don’t succeed are often those whose managers do not have a sufficient understanding of what systems, roles and functions are required to run their businesses efficiently. Combining this knowledge with an ability to measure and assess the success of each role within the business will result in successful recruitment and future appraisal of staff.

In other words, success in developing effective systems for staff recruitment is intrinsically linked with success in business.

The 90-day employment trial law encourages some employers to take the lazy route and to ignore the benefits of developing a robust recruitment process.    

The potential harm to businesses does not end here.

The 90-day trial law could also act as a barrier in the ability of employers to maintain a pool of vibrant, efficient and highly engaged staff.

Although the repeated claim of “seven careers in a lifetime” appears to be a myth; it is reasonable to assume that people, during the lifespan of their professional lives, may develop different passions and interests. The work that seemed interesting and engaging at first may later on become mundane and even painful.

The cost of lost opportunities in replacing poor staff should not be ignored. Surely, it would be a win-win situation if such employees were able to move on to more suitable employments.

But what if some employees, because of the 90-day trial period, were discouraged to take a gamble on a new job? Surely, that would be a lose-lose situation for both the employees and the employers with a potential of a further loss to a new business who could have benefited from re-energized and experienced staff.       

The ability for employees to transfer their skills to where those skills are most sought after and where employees feel most useful and valued is essential to the health of New Zealand businesses.

The 90-day trial law, could discourage this mobility and act as a disincentive to employers to continuously think about how best to retain and motivate their good staff.

It is totally unacceptable that, under the 90-day trial law, employees can be dismissed without valid reasons and some have to accept unsatisfactory working conditions in fear of being let go. 

The natural behavior of business is to recruit staff as a last resort and only in the face of rise in sustained demand from the customers.

The net benefits of the 90-day trial law should not be taken for granted. More research is needed to ascertain the overall impact of this law on businesses and to determine if the law actually delivers on its promise of increasing employment and increasing productivity especially as the economy enters a less buoyant period.   


Donna Miles-Mojab is an active writer and blogger. She worked as a senior mathematics lecturer in the UK before moving to New Zealand as a new mother.  Mojab currently works and resides in Christchurch. She tweets @UnPressed