Opinion: What 90-day trials mean for small business owners

The current government made pre-election promises to extend the 90-day trial period for all businesses, no matter the size. And they moved quickly to get this across the line in December last year.

This bill was heavily endorsed by both National and ACT, as part of the coalition agreement and the government’s 100-day plan. Given the challenging economic environment, 90-day trials have been widely supported by employers.

Critics of the 90-day trial argue that it only benefits employers, not employees but it’s worth noting that employees don’t have to agree to a trial period and can refuse to sign up for it. Additionally, for employees who do agree with a trial period, it gives them a set timeline to also feel out whether the business is a good fit for them too.

The reality is most employers are not trying to get one over on new employees. They want to hire once and hire well but also need to protect themselves should things not work out as planned.

If you’re a business owner, it’s worth considering 90-days trials when hiring new staff.

Increased flexibility in hiring

In business as in life, things don’t always go according to plan. Sometimes people don’t work out as well as we thought they would, and that’s okay. The 90-day trial means that small business owners can assess new employees’ suitability for the role without fear of a lengthy dismissal process. It means that if someone is not right for the role, business owners can pick up where they left off quickly and continue to look for a suitable candidate, saving them time and money.

Encouragement for hiring

Part of the rationale behind reintroducing the trials was to encourage businesses to hire people they might not have otherwise considered. This can be particularly beneficial for smaller businesses looking to expand their workforce, but hesitant due to the risks and cash flow costs associated with hiring. For businesses, this can lead to a more diverse team, which is beneficial for both the business and employees.

Cost reduction

Avoiding lengthy dismissal processes for employees who are not a good fit can save businesses significant costs. By streamlining the termination process during the trial period, businesses can mitigate the financial risks associated with hiring. This avoids any awkward and lengthy conversations later down the track, and saves both parties from unnecessary stress and strain.

Follow best practices

The reintroduction of the 90-day trial does not mean employers can mishandle or mistreat new employees. Business owners must cross their T’s and dot their I’s throughout the trial. This means making sure you comply with employment regulations, treat employees fairly by providing clear communication about the trial period terms, offering feedback during the trial and giving appropriate notice.

Remember, employees are your businesses greatest asset.

Adrienne Begbie is Managing Director of Prospa NZ.

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