INTRODUCTION

This report presents the results of an evaluation of trial employment periods.

On 1 March 2009 an amendment to the Employment Relations Act 2000 came into effect allowing businesses with 19 or fewer employees to hire new employees on a trial period of up to 90 calendar days. The provision allows employers in small firms to determine an employee's suitability for permanent employment without the risk of a personal grievance in the event that the employment relationship is not successful.

Under the amendment, the employee, if dismissed, is unable to raise a personal grievance for reasons of unjustified dismissal, but still has the right to protections against discrimination, sexual and racial harassment, duress or unjustified action by the employer that disadvantages the employee. Employees are still able to access mediation, and good faith still applies to the relationship.

Both the employer and employee must agree to the trial period in writing. A trial period can be entered into only once between the employer and employee.

The objectives of trial periods may be summarised as follows:

• to encourage small and medium enterprises to take on employees
• to reduce employment relationship problems experienced by small businesses
• to provide opportunities for those who might suffer disadvantage in the labour market, including
  • women
  • youth
  • first-time workers
  • Maori and Pasifika
  • people returning to work after a period of unemployment or child rearing
  • people with disabilities or mental illness
  • migrants, or
  • people with overseas qualifications.

Evaluation objectives

The evaluation of trial periods was part of a wider project evaluating three amendments to the Employment Relations Act 2000 which were introduced in March and April 2009 - trial periods, rest and meal breaks and breastfeeding breaks and facilities. This report presents results from the evaluation of the trial periods amendment only: the evaluation of the other amendments is published separately.

The overall objectives of the evaluation were to identify:

1. the extent of knowledge of the amendments among employers and employees
2. the changes experienced by employers and employees as a result of implementing the amendments
3. perceptions of the level of regulatory compliance costs relative to benefits for employers.

In addition, the evaluation set out to test the following policy assumptions about the operation of trial periods:

• There is a high level of awareness of trial periods among the target employer population, but not necessarily a high level of knowledge.
• Trial periods will reduce employment relationship problems experienced by SME employers.
• Trial periods will create extra job opportunities for employees (particularly employees who might suffer disadvantage in the labour market) by encouraging employers to take on new employees when they would not have without trial periods.
• Employees will have fewer job opportunities during the recession, so are more likely to agree to a trial period.
• Employers and employees may consider a trial period as a different form of employment relationship, before and after a trial period.
• Implementing trial periods will lower costs for employers.
• Employers and employees will each have sufficient knowledge to negotiate trial periods that comply with the legislation.

Research method

The evaluation used a mixed-methods approach combining quantitative and qualitative research methods. The method is described briefly here, and more fully in Appendix 1.

The quantitative research consisted of two employer surveys:

• an initial survey conducted over the phone (referred to as 'initial survey' in this report) during October - November 2009. The purpose of the initial survey was to determine the knowledge of and prevalence of trial periods among employers, and to recruit employers for the follow-up survey.
• a detailed internet or mail survey (referred to as 'follow-up survey' in this report), conducted during October and December 2009. The purpose of the follow-up survey was to get more details about the knowledge of and experience of trial periods among employers.

The follow-up survey respondents are a subset of the initial survey. Unless otherwise specified, the results here are from the follow-up survey.

Only employers were covered in the quantitative research; 989 employers in small firms (1-19 employees) took part in the initial survey, of which 527 went on to complete the follow-up survey.

The qualitative research consisted of semi-structured interviews with 31 people including 15 employers, 13 employees, two union officials, and one person from a social support agency.

The quantitative results were analysed using SPSS, and the qualitative material was coded and analysed using NVivo qualitative analysis software.

---