Why we need 90 day trial

This example of an unscrupulous worker highlights why we need 90 day trial periods:

Federated Farmers believes the experience of a husband and wife farming team in Taranaki underscores why the 90-days provision is so important to small businesses.

“Yesterday a member called 0800 FARMING to alert us to a guy doing the rounds in Taranaki who may be gaming employment laws,” says Andrew Hoggard, Federated Farmers Employment spokesperson.

“He appeared to be a keen farmworker but became insistent that all he needed to start was a handshake. This guy even told the couple concerned that he could see they were under pressure so even offered to pitch his tent.

“They did exactly the right thing by getting him to sign Federated Farmers’ industry standard employment contract before starting. That’s where the bush lawyer emerged as he tried to get clauses modified.

“Lucky for them they stuck to their guns and to Federated Farmers agreement and advice. As it turns it wasn’t a long employment relationship lasting a mere 4.5 days.

“On the very first day there was a major argument over helmet use where he refused to wear one. He turned up to work another day wearing a balaclava asking if, “it intimidated them.”

“Along with a generally unhelpful demeanour it appeared to our member that he was trying to bait them into a summary dismissal.

“They called Federated Farmers 0800 327 646 advice line and followed that advice to the letter dismissing the person under the 90-days provision. His parting shot was “it’s going to cost you.”

“It shouldn’t because they stuck to the law and to Federated Farmers’ advice and contract. No matter how small or short term the role is, never “shake on it” or allow a person to start work before they have signed their employment contract.

“What concerns us is that there are bush lawyers out there who could be looking to game employment laws in order to secure a settlement from unwitting farm employers. Our member wanted this publicised to prevent other farmers from being caught out.

“It is why the 90-days provision is so important and why it would become a feeding frenzy for such people if it were to be axed.

“The 90-days provision is a crucial protection for employers to prevent them from being stuck with unscrupulous workers. Our member told us their last employee only left after four years in order to go sharemilking.

“They were fine because they had systems in place backed up by Federated Farmers’ employment contracts and member advice. If you haven’t got your systems together you seriously risk an employment law shellacking,” Mr Hoggard warned.

Labour and the unions always promote the worker as the weaker one in the employer-employee relationship.

But it is very difficult to get rid of a worker who isn’t working out and it’s not just the business that suffers as a result of that, it’s other staff when the dud worker poisons the workplace.

 

37 Responses to Why we need 90 day trial

  1. Bulaman says:

    Can we have this enforced of we get a government with the 5 headed hydra of the left?

    Like

  2. Dave Kennedy says:

    For every dodgy employee who has tried to rip off an employer I can tell another story about an employer ripping off their worker. This isn’t a balance post, Ele, we need employment law that treats both fairly. There already existed a legal provision for trial employments, the 90 day provision was just an attempt to allow an employer to fire at will. Talking to someone recently in the hairdressing industry, the 90 day trial is routinely used to keep an ongoing turnover of cheap staff with no long-term obligations.

    There is probably a very good reason why the Dairy Workers Union gave a donation to the Green Party 😉

    Like

  3. Mr E says:

    “There is probably a very good reason why the Dairy Workers Union gave a donation to the Green Party ;-)”

    Principled Greens? Yeah Nah.

    Like

  4. Andrei says:

    Talking to someone recently in the hairdressing industry, the 90 day trial is routinely used to keep an ongoing turnover of cheap staff with no long-term obligations.

    An anecdote – of course any business that routinely took on people for 90 days then let them go would soon develop a reputation and the source of their cheap labour would soon dry up.

    In the real world of course an employee becomes more valuable over time as they learn to work within the business, knowing what to do with less supervision required and getting what needs doing done without fuss or bother.

    Our real problem is that labour laws, OSH and so forth make it far too expensive for a small business man to take on an apprentice

    Like

  5. bennettleton says:

    I’m a bit nervous about the advice Feds are giving here, because the other point that is really important is that the employee be given a period of time to consider the agreement and in particular the 90 day clause before signing the agreement, if they literally sign then start farmers may not be protected as there have been cases where the Employment Court has held in such circumstances the employee wasn’t given a reasonable opportunity to seek advice and consider the effect of the agreement.

    Like

  6. JC says:

    DK,

    Can you explain why NZ was one of only two countries in the OECD without a probationary employment period, that the average length of period in the OECD is 90 days with some exceeding six months (eg Norway) and when will the Greens announce it will not form part of any government that includes Kim Dotcom because of his appalling and illegal abuse of his staff re hours of work and paying less than half of the minimum wage?

    JC

    Like

  7. Dave Kennedy says:

    “An anecdote – of course any business that routinely took on people for 90 days then let them go would soon develop a reputation and the source of their cheap labour would soon dry up.”

    When we have around 18% of our workforce either unemployed or underemployed, the market is heavily in the employer’s favour. It is interesting that the biggest changes to employment law that favour employers generally occurs when there is higher unemployment. Given that youth unemployment is much greater than other groups, and young employees are often reluctant to challenge employers or are aware of their rights, it is difficult to judge the full extent of 90 abuses, but they are common.

    I agree that there needs to be more support for employers to take on apprentices. There is also the need to ensure that all employers are aware of an obligation to properly train and support young employees.

    According to our business spokesperson, David Clendon, holding onto staff through being a good employer is one of the most important aspects of a sustainable business. Unfortunately some of our worst employers have no trouble employing staff, despite a high turnover, because of a shortage of full-time work in many regions. Poor employers will always take advantage of minimum requirements and good employers will always provide more than the minimum. We should make the minimum the same as what a good employer would do.

    Like

  8. Dave Kennedy says:

    “Can you explain why NZ was one of only two countries in the OECD without a probationary employment period”

    Mr E, nonsense, we did have a probationary provision but it gave the workers some employment protections that the 90 day period doesn’t:
    http://www.dol.govt.nz/infozone/myfirstjob/employees/starting/trial-and-probation-periods.asp#probation

    Like

  9. ploughboy says:

    dk
    i think you will find the dairy workers union works for dairy factory workers not farm workers

    Like

  10. Mr E says:

    Ben,
    Does the Feds agreement have express directives to the signatory to seek legal advice before signing?

    Dave, What is nonsense?

    Like

  11. Gravedodger says:

    @ Andrei not sure why you introduce “cheap labour” to the thread as the 90 day law has no effect on remuneration. except after 90 days the employee may demand above minimum rates secure in the law protecting the job.

    On the subject of the post it would appear to be a more than random occurrence as I heard of a similar incident in another region during recent weeks and let it lie as it seemed to be a ploy to create an election issue around employment law.
    Now can anyone think of an organisation that a rort like that might benefit in a marginal electorate where the labour candidate is searching for every vote and getting little or zero support from the haters and wreckers.

    Like

  12. Andrei says:

    We should make the minimum the same as what a good employer would do.

    A statement if ever there was that Greens do not grasp elementary economics,

    Money, since we abandoned the Gold Standard is actually worth nothing except as toilet paper

    But if we agree to accept monopoly money for goods and services it becomes a workable proposition, But if you raise the minimum wage two things happen

    (1) It no longer becomes economically viable to hire someone to perform certain tasks

    (2) The price of everything rises ie it takes more monopoly money to buy the things you want and need and thus wages rise across the board

    Net result the Red Queens Race and the monopoly money is worth even less than before.

    This has been the scenario that has played out almost all my entire life ever since Richard Nixon took the Dollar off the Gold Standard in 1973,

    It is also why the World is on the cusp of WW3 as the giant ponzi scheme that is our financial system has become is about to collapse.

    Like

  13. bennettleton says:

    Mr E, I believe they’ve always had those directives it tends to turn more on factual circumstances where the employer says sign this now start work. Although as a matter of general contract law if you sign something you are deemed to have read it and the seek advice clause would prevail in employment law they like to do things differently and mix it with good faith etc…

    Like

  14. Dave Kennedy says:

    Mr E, my apologies, I attributed a comment to you that was actually from JC.

    Like

  15. Mr E says:

    Ben, I’m not sure the Feds are promoting thoughtless signing of an employment agreement. Certainly, I didn’t read such things from this article.

    The message from Ben is – give employees a fair chance to seek legal advice? Is that correct Lawyer Ben 😉

    Like

  16. bennettleton says:

    Correct!, I don’t think its deliberate either just a general warning to make sure people don’t read it as sign then start and your safe

    Like

  17. Dave Kennedy says:

    “(1) It no longer becomes economically viable to hire someone to perform certain tasks”

    “(2) The price of everything rises ie it takes more monopoly money to buy the things you want and need and thus wages rise across the board”

    Sorry, Andrei neither are givens and aren’t supported by evidence. As long as the minimum wage is increased incrementally it actually puts more discretionary income in the pockets of workers and businesses actually earn more too. Also most of the largest employers of low waged workers have enough to pay their workers more, in most cases they choose not to because they don’t have to. Private rest homes expect an annual 15% increase in profits to pass on as dividends and while much of their income is generated from state funding there is no accountability to make sure that their workers also gain from their increased earnings. There are documented cases where increases in government funding to rest homes to cover negotiated pay increases for workers has been spent on buildings instead.

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10861794

    https://www.consumer.org.nz/articles/rest-homes

    As you will also be aware, the cost of producing stuff reduces the more you sell, increased sales from the greater spending capacity of workers more than covers a rise in wages. The Greens plan to raise minimum wages by 60 cents and hour approximately every six months to bring it up to somewhere near a living wage. This will also mean a cut back of the $3 billion or so that has to top up wages (Working for Families) and will free up more money for health and education.

    I am sure there will be some cases where the odd job will suffer, but overall moderate wage rises do not have the effects you claim.

    Like

  18. Goldie says:

    Dave Kennedy: “I can tell another story about an employer ripping off their worker.”
    Good.
    I look forwards to some real life examples.

    Like

  19. Mr E says:

    Dave is correct on this one. Or at least to a degree. The affect of altering the min wage is dependant on the amount the minimum wage is changed. Generally research indicates small changes are absorbed without significant impact. Although it is fair to say there is data supporting both arguments, the research I have read tends to favour insignificant impacts.

    Where Dave is wrong and the Greens are wrong is significant changes will have negative impacts and what the Greens are proposing is significant.

    One example is the number of Government employees that will need to be paid more. The living wage of $18.40 is expected to cost the tax payer $454M in extra salaries for government staff as a direct measurable impact.

    NZ has the highest min wage relative to average salary in the OECD. The Greens want to make us stand out like a sore thumb. Costing the tax payer millions, reducing job availability, reducing hours of work for the poorest.

    Research shows significant negative impact as a result of such changes.

    Reject this NZ. Reject it. Vote – someone else.

    Like

  20. Paranormal says:

    DK you’ve been called on your lack of ‘evidence based’ bs previously.

    For example you need to show where “private rest homes expect an annual 15% increase in profits to pass on as dividends” comes from. I think you’ll find you are talking bs yet again and shows your lack of commercial nous. You probably mean they require a 15% return on investment which is quite different. No business can provide consistent profit growth year on year without an exponential growth in revenue.

    “As you will also be aware, the cost of producing stuff reduces the more you sell,” Again more half baked economics. Do you mean to talk about economies of scale where fixed costs are spread across a larger production run? http://en.wikipedia.org/wiki/Economies_of_scale

    Andrei was talking about the inflationary impact of your policy that you have not taken into account. An approx 7% increase in wage costs by the end of the first year will need to be met from somewhere. Prices will need to rise or businesses will go under.

    For a start you should do some reading on the cost of, and return on, capital.

    Like

  21. JC says:

    Lifting the minimum wage in stages to something approximately in line with the so called living wage will of course have impacts.

    1. NZ currently has one of the highest minimum wage rates in the world.. what is it other countries know that we don’t?

    2. Relativity. There will have to be a lift to most other wages to retain their current relativists. Benefits and superannuation will also have to go up.

    3. Inflation will go up.

    4. There will be an increase in costs in many industries and especially the services area.

    5. Prices will rise or some businesses will go under.

    6. There will be job losses initially and then further down the line as NZ loses competitiveness in the export area.

    7. We move closer to technology and robots replacing people before we are prepared for it.

    JC

    Like

  22. TraceyS says:

    Ben’s right – the 90-day provisions are full of fishhooks for the unwary and the cases are now starting to come through the legal system showing that if you put one foot out of place you can’t rely on them. They actually provide surprisingly many protections for employees, but as these are not often mentioned in all the angry hype, most of us don’t know about them. If everyone took a more balanced, level-headed, and fulsome look at things then the protections would get far more attention and, subsequently, employers would make fewer stuff-ups.

    Removing the 90-day trial period will have one effect that you can be absolutely sure of. That is it will drive further casualisation of the workforce as employers look to the only alternative that remains for them to check that things are right before making a solid commitment to the employment relationship.

    All the 90-day trial did was to provide a legitimate pathway to what was already happening by other means. It is far better to accept that some practices happen and have them out in the open rather than being dressed up as something else. Take an employer hiring a person casually in order to try them out before thinking of offering a permanent position. There are no protections for that person unless they can prove that a permanent position existed which is a hard ask for someone in those shoes.

    I have used the 90-trial period and would do so again. But certainly not in the way that Dave describes. When used properly there are no problems at all with it. If the terms of an employment offer are set out clearly, and the person doesn’t like them, then they are not being forced into taking the job.

    Abuse of employment processes happens in all areas, not just in regard to 90-day trials. This doesn’t mean there is a problem with what the law provides, but more with how it is understood, applied and enforced. Education and promotion of good faith in employment relationships is the key. Good faith being a two-way street.

    Dave should be aware that calling good employers supporters of worker “exploitation” is not a very good start.

    Like

  23. Dave Kennedy says:

    “The living wage of $18.40 is expected to cost the tax payer $454M in extra salaries for government staff as a direct measurable impact.”

    Mr E, you forget the increased tax revenue, Government servants tend to pay tax on all their income. There will also be an increase in tax revenue from all other workers and a decrease in what is spent on Working for Families (currently around $3 billion a year). That $454M is easily covered. Whereas the tax cut to the rich cost the country $1.2 billion in lost revenue per year.

    “For example you need to show where “private rest homes expect an annual 15% increase in profits to pass on as dividends” comes from. I think you’ll find you are talking bs yet again and shows your lack of commercial nous”

    Paranormal, Ryman must have got it wrong?

    http://www.rymanhealthcare.co.nz/investor-centre/news/2011-investor-news/1491-ryman-announces-17-profit-increase

    Like

  24. Dave Kennedy says:

    “When used properly there are no problems at all with it.”

    Correct, Tracey, but it isn’t good when not used properly 😛 Sadly that happens all too often.

    Like

  25. TraceyS says:

    “…it isn’t good when not used properly”

    Tell me what is?

    Fraught with all sorts of tension, the employment relationship can never be perfect.

    But that’s just like so many other things where I come from.

    Like

  26. JC says:

    “Mr E, you forget the increased tax revenue, Government servants tend to pay tax on all their income. There will also be an increase in tax revenue from all other workers and a decrease in what is spent on Working for Families (currently around $3 billion a year). That $454M is easily covered. Whereas the tax cut to the rich cost the country $1.2 billion in lost revenue per year.”

    Actually its an insidious way for the Greens to kill off families and advantage single and childless couples.

    Beneficiaries lose money from a living wage, young people get cut out of the job market and parents with 2-4 children lose thousands per year whilst single adults and childless couples make additional thousands per year.

    Click to access lw-2726820.pdf

    JC

    Like

  27. Dave Kennedy says:

    JC, the report you linked to was written a year ago and seems to refer to an immediate application of the living wage. Surely you can’t be implying that the minimum wage shouldn’t be introduced at all? Also why should CEO’s be regularly given huge increases but the average worker not? Two rules?

    http://www.stuff.co.nz/national/politics/9187814/State-bosses-pocket-large-salary-rises

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10794629

    http://www.scoop.co.nz/stories/PO1104/S00363/200000-pay-hike-for-ceos-while-the-rest-struggle.htm

    Like

  28. Paranormal says:

    DK – no Ryman didn’t get it wrong – you misstated what is happening there. Yes there is an 18% lift in profit THIS year. You said this was “Private rest homes expect an annual 15% increase in profits to pass on as dividends”. You mistated it. They don’t want an annual increase, they want a fair return on investment.

    But lets look into this a little further. Lets say Ryman shares are trading at $7.70 (https://www.nzx.com/markets/NZSX/securities/RYM) and they provide an annual dividend of $0.072 (as shown in your link) That’s less than a lousy 1% return on investment. With this level of return investors are better off leaving their money in the bank. I realise there is more happening with 50% of profit retained for growth but that still only provides an overall 2% return. no wonder things are tight in aged healthcare. Any government directive on wages would certainly have a negative impact.

    Quite frankly DK your once over lightly headline driven ‘evidence based’ approach is nothing short of blind ignorance.

    Like

  29. TraceyS says:

    A question for Dave; did you forgo your tax cut? After all, there is nothing stopping you paying your tax at the pre-tax-cut rate. Did you? And if you took the tax cut, why did you?

    Maybe ’cause you’re a really great guy who works hard, is not too rich, and felt you thoroughly deserved it.

    “Ditto” go thousands of New Zealanders.

    The exact numbers will become clearer to you tomorrow night.

    Best of luck.

    Like

  30. Mr E says:

    Paranormal.

    Well done. Dave’s been called out abut this before. He appears to hate successful business.

    Such is the way of the socialist.

    https://homepaddock.wordpress.com/2014/09/08/fools-paradise/

    Like

  31. TraceyS says:

    Dave’s analyses consistently lack intellectual rigour. If he succeeds as a politician I predict that will trip him up time and time again.

    Like

  32. Dave Kennedy says:

    Paranormal, Ryman Healthcare clearly state in their annual report that they are aiming for an annual 15% increase in growth and underlying profit (which came to 18% last year) and half of that profit will be directed into into future growth. You may be right that I confused growth with profit, but the two go hand in hand. What it does mean is that the very workers who support the growth and profit have their wages kept low to maximize dividends. The profits that are redirected into growth are more likely to go to more building than lifting wages. You may call this just good business but as some of the lowest waged workers in the country it does seem very callous.

    Like

  33. Dave Kennedy says:

    “Well done. Dave’s been called out abut this before. He appears to hate successful business.”

    It just comes down do my definition of a successful business. To me a successful business is one that operates sustainably and treats its workers fairly. I also prefer businesses that have provide an ethical product or service and I don’t think tobacco companies do that (as an example).

    Most commenters here appear to believe that the economy can’t afford to pay living wages despite strong upturns and that extra profits should be directed to shareholder dividends before lifting wages. I have also been told that my questioning the massive increases in CEO salaries and directors’ fees are just pure envy and that the rich getting far richer while those on low incomes have dropping living standards is just and fair.

    I’m afraid that I don’t agree with that philosophy and this was a letter that I recently had published in the Southland Times to explain why:

    Dear Sir

    Eighty years ago New Zealand had suffered a substantial economic recession and a disastrous earthquake. Families at that time were struggling on low wages, our housing was in a shocking state and child poverty was common.

    Michael Joseph Savage became Prime Minister and he led a progressive government that implemented policies and programmes that dramatically improved the lives of ordinary New Zealanders.

    Savage’s Government:
    · Built thousands of houses.
    · Raised the minimum wage and strengthened the rights of workers and their ability to collectively bargain.
    · Together with the director of education, Clarence Beeby, they abolished the problematic proficiency testing and focused on creating a system that met children’s diverse needs.

    Savage was subjected to huge criticisms and nasty attacks regarding the economic danger of lifting wages and people were fearful of dropping standards in education. Scholars of history will know what actually resulted, families became healthier and child poverty was dramatically reduced. The economy went from strength to strength because people had more money to spend on local goods and services and our education system became the best in the world.

    Our current issues are not dissimilar from the 1930s except we have the added crises of environmental degradation and health issues such as obesity and diabetes. Again we need a progressive Government to make the changes necessary for our our economy to work for everyone again, not just an elite few.

    For a fairer society, a smarter economy and a cleaner environment (and cleaner politics), party vote Green.

    Like

  34. Paranormal says:

    For a poorer more unfair society vote green as they have no idea what they are talking about. DK you talk about fairness and then suggest increased profits is a bad thing – when in fact the business is marginal when analysed properly.

    As for the Welfare State – lets leave comment on that to Sir Apirana Ngata who suggested it would be the death of his people. He wasn’t wrong. That you wish to further entrench poverty and dependence speaks volumes.

    Like

  35. Mr E says:

    Dave doesn’t like:

    Gains in directors fees that are in accordance with the growth of the business is scale. You’ve said yourself Ryman is reinvesting in itself. That means directors are now responsible for more resources. Ryman is now a multination which is also one of the reasons for lifts. Directors now need to understand not only the local economy but overseas ones plus the impacts of politics etc. The economic and political knowledge acumen increases astronomically becoming a multinational.

    Regarding staffing: let me ask you this Dave. How many staff have complained about Ryman vs satisfied?
    http://www.rymanhealthcare.co.nz/careers/testimonials

    I think you criticise Ryman on scant poorly correlated information. And for your own political gains. I think that bodes poorly for a politician, particularly one that considers himself part of a “principled” party.

    But hey, don’t let me, or the facts get in the way of your criticism of a successful business Dave. Heaven forbid success happens. Heaven forbid people are rewarded for it.

    Whilst talking about success, reward and hardwork, you obviously think that commenting on blogs will reward the Green party this year? Whilst a majority of candidates are desperately beating the pavements to meet and greet in their last day.

    Like

  36. JC says:

    “Surely you can’t be implying that the minimum wage shouldn’t be introduced at all?”

    There’s a better argument for that than either an accelerated minimum rate and/or move to a living wage. However, we have our current beast and the best way to control it is by small periodic adjustments hopefully in line with productivity increases.

    As for CEO increases.. that’s the business of business.. I note that Ryman has made two 5% increases to it’s workers over the past two years plus increased training.. so they are doing better than plenty of other occupations and maybe so because of a highly paid CEO increasing profits for the business as a whole.

    What is of far more consequence can be seen in (say) Auckland City pay structures where 14% of employees make over $100,000 ie, 1510 people and this is a 20% increase in rich pricks in just a year.. poor ratepayers. What is it? a projected rate rise of 8% a year for the next decade to cover costs?

    A CEO is responsible to his shareholders to create value and profit but Auckland City is simply creating an oligarchy and I don’t doubt a more naked form of crony capitalism as firms encourage the Mayor to build his public transport schemes that will make them even more rich.

    JC

    Like

  37. Paranormal says:

    DK @ 10.34 lets see if I can make this clear for you as you clearly don’t have a clue. Your workers will not have jobs if Ryman can’t raise it’s profits to at least provide a return that is above what investors can get from leaving their money in a bank. No investors = no business = no jobs.

    Like

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