Wednesday, August 25, 2010

Trial Periods: Guest Post by John Hughes

There’s no doubt that managing people can be a tricky business. In just one workplace, recently, manager A had to deal with a team member who had been found to have misrepresented the nature of some personal spending on a credit card dedicated for business use, while manager B discovered that a member of his team had directed inappropriate sexual comments at women who also worked there. Disciplinary action would obviously have been on the cards under conventional employment law principles.
But each of these managers showed themselves to be acutely responsive to the needs of the team members in question. Manager A described the credit card offence as a technical matter and argued strongly that no action should be taken until a high level investigation had taken place and natural justice observed. Although the offender took it on himself to resign, he was soon reinstated. Manager B, meanwhile, explained his team member’s lewd behaviour by saying that he was unused to the work environment he now found himself in and as demonstrating that he needed to grow into a job that was new to him. He was given a “talking to”.
Manager A, we might remind ourselves, was Prime Minister John Key faced with the issues arising from Housing Minister Phil Heatley’s misuse of his ministerial credit card. Manager B, again, was ACT leader Rodney Hide, dealing with the fallout from the misbehaviour of ACT MP David Garrett.
So why are both men now so keen to introduce trial periods which will potentially deprive all employees in New Zealand of the consideration that they extended to their own colleagues? Since it might seem churlish to suggest anything as simple as a double standard at work, let us consider the arguments that have surfaced since the decision to extend the current trial period scheme was announced.
First, there is the freedom of choice argument. In the view of the Prime Minister, no-one needs to sign up to a trial period. They can “opt out”. Despite attempts to distance the current government from the thinking underpinning the Employment Contracts Act 1991, this is neo-liberal ideology at its purest. Employers and employees, in this theoretical world, are seen to possess equal bargaining power. Whilst some job applicants (a successful foreign exchange trader, for example) may indeed possess a degree of bargaining power, in the real world others plainly will not (for instance a pizza deliverer, even if the government had not already voted down legislation to improve his or her existing working conditions as a contractor).
The Government has pinned much of its propaganda on findings in a Department of Labour report that surveyed 771 employers in detail but interviewed only 13 workers (this purportedly due to “resource constraints”). Ironically, perhaps, that research makes this very point about bargaining power. The report showed that the employers surveyed generally made a take it or leave it offer which included non-negotiable trial periods and that the employees surveyed generally were unaware of their ability even to attempt to negotiate on the issue.
Even if such awareness existed, how realistic is it to expect job applicants to expect to bargain over such issues when hundreds of people queue for a few vacant positions at a fast food outlet and there remains the very real prospect of a social security stand-down if a job offer including a trial period is refused?
Second, the Prime Minister and the Minister of Labour have argued that the current limited trial period law has increased job opportunities. Once again, however, the Department of Labour research on which this claim is based shows nothing of the sort. Rather, in the words of that report “it cannot be stated categorically that trial periods had created extra job opportunities”. The much-trumpeted 40% of employers surveyed who claimed that they were unlikely to have hired a particular recruit without a trial period tells us nothing about how that conclusion was reached and certainly does not tell us that the job would not have been there in the absence of trial periods.
Third, the Prime Minister and Minister of Labour have both asserted that the extension of trial periods will assist marginalised groups such as lone parents and migrants who would otherwise not get job offers. It’s remarkable, isn’t it, how the purported concern of the Government for the poorest in society always manifests itself in practical measures that further worsen their lives, working or otherwise? That concern was not apparent when officials repeatedly warned the Government that axing ACC entitlements would hit the most vulnerable groups the hardest; it wasn’t there when the decision to raise GST was taken, again disadvantaging the poor infinitely more than the rest of society; and it certainly wasn’t there when the Government passed legislation allowing the Work and Income Service to halve the benefits of parents who fail new work tests, at a time when the Public Health Advisory Committee reported that there is already massive, and we would say utterly shameful, inequality in the health status of New Zealand children (beneficiaries’ children were identified as the most likely group to face continuing serious hardship in this respect).
Then, of course, if employers were indeed behaving as the Government claims, they had ample opportunity to demonstrate this in the skewed Labour Department Report on which the Government has relied so heavily. Unsurprisingly, that Report found instead that “very few” employers had used trial periods to employ marginalised workers. By telling these same employers that marginalised groups are a risky prospect without trial periods, moreover, the Government has effectively legitimised prejudices which would amount to unlawful discrimination if acted upon.
Fourth, if this new-found compassion for the poor seems a remarkably convenient camouflage for a right-wing policy that suits the Government’s natural constituency, it isn’t alone in this respect. So also is the much-vaunted comparison with other countries that use trial periods, especially the UK. Three years ago, when the parties forming the Government were in opposition and UK standards were used to promote legislation for flexible working arrangements, the present Minister of Labour Kate Wilkinson decried the comparison. “The current set of labour market and economic and social conditions in New Zealand”, she said, “does not present a close enough match to any [other] countries for that country’s solutions to be the obvious choice”. Indeed, she stated then that “it is dangerous simply to compare our situation with the United Kingdom situation and say this is the law for us”. Three years on, it appears that this danger only arises when the comparison with the UK favours employees rather than employers.
Then, finally, there are the simple misrepresentations. The Prime Minister has claimed that unions are “hyping up” the 90 day trial period and that workers currently on trial periods cannot be dismissed without reasons being given: “you can say it didn’t work out, but you have to say why it didn’t work out”. This is completely false. The trial period provisions introduced by the Government expressly remove the usual obligation to provide reasons for dismissal and the relevant official background papers state that the trial period proposals were “explicitly developed on the basis that there would be no requirement for employers to give reasons”. As misrepresentation goes, the Prime Minister’s claim ranks with Labour Minister Wilkinson’s original assurance that trial periods were covered by good faith provisions requiring notification of proposed dismissal. Once again, to the contrary, this aspect of good faith is expressly excluded from trial periods.
BAS, of course, is primarily concerned with the interaction of trial periods and the social security system. Here, the Work and Income Service requires that clients who are receiving the unemployment benefit and are referred to trial period of employment either take up the trial or face loss of benefit. Further, if a worker’s trial period is terminated after moving to trial employment from other work, he or she faces a social security stand-down. Despite original promises by the National Party in opposition, when trial periods were introduced under urgency in December 2008 no change was made to the provisions for waiver of the one or two-week stand-down before receiving a benefit. (This stand-down can be waived only if the applicant has been in full-time employment for less than 26 weeks; was receiving a benefit immediately before they were employed; and if their benefit was stopped because they moved into work.) Even worse, if a Work and Income case manager believes that a trial period employee has been dismissed for misconduct, or left work voluntarily, that employee ultimately faces a 13 week disqualification period without the option of first testing the validity of the dismissal (and the consequent stand down) through an unjustifiable dismissal claim, a right which exists for all other dismissed employees.
So, once again, we are back to the brutal politics of the 1990s in which the marginalised are squeezed between precarious working conditions and an increasingly mean-spirited and punitive social security system. Freedom of choice, anyone?

This piece was first published in the Spring Newsletter of the Beneficiary Advisory Service, (“BAS”). The BAS specialises in information and advice on low-income issues and social security advocacy and can be contacted at Suite 18, 107 Armagh Street, Christchurch, PO Box 130090, Christchurch. Phone, 379 8787, Fax, 377 3561. Email

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