DISCUSSION

In this section the research results are discussed in the context of the policy assumptions about the trial period amendment and with reference to the literature on employment protection.^[9] In considering the research findings, note again that employees were included only in the qualitative research, which has explored issues for employees but does not indicate how widespread the issues are. (Thirteen employees were interviewed, and some of them had experience of more than 1 trial period.)

Awareness & knowledge of trial periods

Employers were highly aware of trial periods. A majority of those surveyed knew some key details but employers' knowledge was uneven. However, not all employers had hired anyone since trial periods came into effect and the research showed that employers would access information about trial periods as and when they felt they needed to. Employers' main sources of information about trial periods were the mass media, the Department of Labour, professional bodies and trade associations. Notably, there was no difference in the level of knowledge of trial periods between employers who used trial periods, and employers who had not used them.

Employees were found to have limited knowledge of trial periods. Employees did not necessarily know that trial periods had been introduced from 1 March 2009, and some had experienced a form of trial period prior to the amendment, which may have been a probationary period under the Employment Relations Act 2000 or some other method used to more easily dismiss unsuitable or redundant employees. Employees' sources of information included the terms and conditions of previous employment agreements, friends and family, the media, and the internet.

The qualitative research found that both employers and employees had some poor information about trial periods, which affected employers' use of trial periods. This included the belief that the usual dismissal procedure to dismiss employees under the Employment Relations Act 2000 had to be followed and that the trial period had to last a full 90 days.

In general, though, the research found that employers and employees had sufficient knowledge to negotiate trial periods that complied with the legislation. It should be noted though that although three quarters of employers knew a trial period must be mutually agreed, they generally did not directly seek employees' acceptance of a trial period, rather it was stated in the employment agreement with other terms and conditions. Thus in practice, for many employees the job offer was conditional on their accepting a trial period, as is the case with other terms and conditions of an employment offer.

Creation of job opportunities (particularly for employees who might suffer disadvantage in the labour market)

The evaluation found that half of hiring employers had used a trial period in the first eight months since their introduction (the time period covered in the quantitative research). Employers tended to use trial periods with all or none of the employees, rather than only with some of them.

Most employees were retained past the trial period, with just under a quarter dismissed using the provisions of the trial period. Performance was the main reason for dismissal. There was no data readily available with which to compare this dismissal rate with that of dismissals by small firms prior to the introduction of trial periods, but this is an important area to look at further. Dismissals generally occurred in the first couple of weeks, or else towards the end of the second month. While the trial period eased dismissals for employers, the qualitative research showed employers recognised dismissals as an unfavourable outcome, and tried to avoid it. Employers were aware that the cost of recruitment and training made dismissals expensive, and some tried to work with the employee from the beginning to prevent a dismissal. Where employees were dismissed, there were cases of employers trying to find them other employment or training.

The ability to use trial periods appeared to have encouraged 40% of employers who had hired someone to do so, however without any counterfactual evidence it cannot be stated categorically that trial periods had created extra job opportunities. The international literature suggests that exemptions to employment protection legislation, such as the trial period legislation, increase both hiring and firing but have an unclear overall impact on unemployment (Garibaldi et al 2003, Riphahn & Thalmaier 1999, Marinescu 2009).

While employers acknowledged that trial periods could give a chance to disadvantaged job seekers, very few of them used trial periods specifically for this purpose, being focused on hiring the most suitable candidate (who may incidentally have been a disadvantaged job seeker). Employers reported that half of those 'last hired on a trial period' were young people. This reflects a number of factors including the churn of young people in the labour market, relatively high employment rates for 21-24 years olds, the type of jobs and industries using trial periods, and employers' views on the use of trial periods. However the finding in relation to young people aligns with the international literature on the topic which suggests that strict employment protection legislation reduces the employment of youth (Garibaldi et al 2003, Ochel 2009, OECD 2004). This is an area where further research would be useful.

Effect of the recession

The assumption that employees would have fewer job opportunities during a recession, so were more likely to agree to a trial period, could not be examined in the qualitative research due to the uneven knowledge employees had about the trial period, for example, not knowing they had to be mutually agreed, and thus considering them the norm. Trying to ascertain macro-economic impacts of and influences on trial periods was out of scope of this study, but is another area for further research.

Effect on the employment relationship and employment relationship problems

Employers who had used trial periods and employees who had been through one generally believed that the trial period did not change the nature of the employment relationship.

Employers most commonly used trial periods to check an employee's suitability for the job, followed by ease of dismissal if the employee was not suitable. The qualitative research further showed employers did not use a trial period if they thought it adversely affected the employment relationship; if they already knew the employee; or if the employee was going to be working for just a short period. As the evaluation found that half of eligible employers had not used trial periods, this too is an area that could be explored in more depth. For example, although the international literature exploring employers use of trial periods is very limited, there is research that suggests trial periods are used as a sorting mechanism, as they induce self-selection amongst applicants, attracting those who are confident their work will be acceptable (Loh 1994a, 1994b).

Employers in the qualitative research generally raised the issue of a trial period while recruiting the employee, although where the trial period was included in an employment agreement, this was not necessarily signed before employment began. Employers seldom changed their method or frequency of monitoring their employees' performance or communicating with their employees because of the trial period. Such monitoring and communication from the employer sometimes led to the employee leaving before they were dismissed. Thus the use of trial periods seemed to have averted employment relationship problems in a few cases, often because the employee had been dismissed or else left of their own accord before likely dismissal from the employer.

Employees saw trial periods as an opportunity not just for the employer, but also for themselves to assess the suitability of the job, they also saw it as making them more vulnerable to reduced job security, and unfair treatment from employers. This belief was confirmed for the few employees who had been dismissed without explanation and, in their view, unfairly. When unfair treatment including dismissal did not eventuate, the experience of being on a trial period for employees was not negative.

Thus employees expressed a range of views on being employed on a trial period with some considering they would accept a trial period again, some of these albeit reluctantly. A few would rather have no job than work within another trial period, particularly because they could be dismissed without reason during a trial period. Note also that union officials interviewed reported examples of what appeared to be misuse of trial periods, commonly occurring when a business changed ownership.

One issue raised by the research but not explored further was employee behaviour after a trial period, with one case of an employer considering an employee was less productive after the trial period. This effect has been noted in other studies of employee behaviour, particularly in relation to absenteeism after the completion of a trial period (Riphahn & Thalmaier 1999, Riphahn & Ichino 2001). This is another area that could be examined in future research.

Lower costs for employers

The evaluation found some support for the assumption that trial periods would lower costs for employers. Employers had not incurred any costs in implementing trial periods, and some had avoided the costs of dismissing or retaining unproductive employees.

Employers were generally very satisfied with how the trial period provision was working for them, with just over half rating it as working 'extremely well', and very few rating it negatively. Most employers who had used trial periods would continue to use them to lessen the risk of costs associated with dismissing or retaining unsuitable employees. Overall, employers thought the use of trial periods was very beneficial to their business. This aligns with the international research which suggests that a probationary period will mitigate productivity problems caused by employment protection legislation as firms can dismiss workers unsuited to the job at low cost at the beginning of the employment relationship (Autor et al 2007, Kugler 2000, Marinescu 2009).

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