Employment Law Changes

John Shingleton

Director of Onlinelawyers

Most of you will be aware the new government is looking at changing the employment law landscape. Make no mistake, there will be a greater focus on compliance. Employment lawyers will flourish… HR teams will be busy.

Under the proposed reforms, if you employ less than 20 employees, the 90-day trial period rules will not change. But, you will still need to strictly comply with the current rules.

If you employ over 20 employees, then you will have to rely on the existing probationary employment regime as 90-day trial clauses will be banned.

Clause 67 of the Employment Relations Act 2000, as it stands, governs probationary periods. For an employee to be under a valid probationary arrangement, the arrangements and the fact of the probationary period must be specified, in writing, in the employment agreement.

The rules of unjustified dismissal, fair and reasonable disciplinary and performance review processes also apply. That is a key difference to having a 90-day trial period in place. Setting aside one’s views on the merit of these reforms, having a robust but fair and transparent probationary program may not necessarily be a bad thing.

By hiring an employee on a probationary period, you will be signalling to the employee that for a certain period, the employee’s performance will be closely evaluated. This is to be contrasted with employing someone on no probationary period at all, where if you have performance concerns then you must start a performance review from scratch.

Another change that appears to be on the horizon is the proposal to give to contractors similar rights to those held by employees. This could be quite disruptive and could require you to revisit how you structure your workforce.

I also note there is the risk the Government might introduce statutory redundancy compensation. Currently, you are legally allowed not to pay redundancy compensation. For small and medium sized businesses, this is, in my view, crucial, as often the margins are quite tight.

To impose on some employers that are having to let go of staff because of financial constraints, an obligation to pay compensation, could well cause the employer to close shop altogether. Most of my clients who have had to make staff redundant have done so as a last resort and would, in many cases, have not been able to meet extra compensation payments.

Like you, I suspect, I am watching the reversal of current legislation with some interest but also concern for some employers because of the added compliance costs and legal risks.

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