90-day trial popular, other red-tape not so popular

The 90-day work trial appears to be creating more employment opportunities in the SME sector, according to the latest nationwide MYOB Business Monitor survey.

Almost two thirds (63 percent) of small businesses (6-19 employees) and 16 percent of micro businesses (1-5 employees) have employed a new staff member on a 90-day trial in the last year. Meanwhile, just 13 percent of small businesses and five percent of micro businesses have dismissed a staff member within their trial period over the 12 months to August 2015.

MYOB New Zealand General Manager, James Scollay, says that while it may attract opposition, the 90-day trial legislation is extremely popular among local SME operators.

“Local businesses see it as the opportunity to minimise some of the risks of employment, enabling them to create jobs that otherwise wouldn't exist, while ensuring they have the right fit for their organisation,” says Scollay.

“As a way of stimulating employment opportunities in the sector, it appears to be effective, with a far greater percentage of SMEs taking on new staff with a trial period, than those who have used the provisions to dismiss an employee.”

Employment growth in the sector will be significant this year, with nine percent of SME operators planning to take on more full-time staff and 11 percent expecting to employ more part timers. Twenty percent of all SME operators are also intending to lift pay rates in the next 12 months.

Although the 90-day trial provisions are being widely used, not all legislation is as popular with employers, says Scollay.

“After the ability to actually find staff, compliance concerns are the biggest pain points for employers.”

According to the survey, the top three employment-related pain points for businesses are:

1. The ability to find new staff – 32 percent.

2. Understanding health and safety compliance – 30 percent.

3. Dealing with payroll compliance – 29 percent.

Seventy-five percent of the 1000-plus business operators surveyed would like to see ACC levies reduced, 64 percent would support the simplification of PAYE rules, and 59 percent would like to see SMEs exempted from a requirement to have a health and safety committee.

“Alongside dealing with ACC costs, which the Government has promised will be addressed in the next year, these are the key areas of employment legislation SME operators would like to see addressed,” says Scollay.

“One of the things we are once again seeing in this latest MYOB Business Monitor, however, is the strong sense of fairness small business employers have for the staff they work closely with.”

“Just fifteen percent of respondents said they would be in favour of introducing the use of so-called ‘zero-hours’ contracts into employment legislation. And although it is popular, most don’t want to see any extension in the trial period for new staff.”

An initiative to extend the trial period to 120 days gained just 23 percent support.

Scollay says MYOB estimates over 30 percent of the New Zealand workforce is paid using MYOB software and the company is investing to provide easy online payroll solutions for all employers – whether they have just one employee or employ over 500 staff.

“We are focused on creating an environment which makes it easier for employers to understand and manage their obligations and lowers the barriers to employment.

“The SME sector offers a strong opportunity for employment growth in New Zealand, provided employers aren’t tied up in too much red tape.”