Four out of five companies which used a controversial 90-day trial for new workers retained the staff member once the period was over, a study has found.
A Department of Labour survey of around 2,000 employers and interviews with 53 companies found that 60 per cent of employers had used the trial system, and 40 per cent would not have hired a new person without it.
The National-led Government's initiative, introduced to all businesses in April last year, allowed companies to dismiss workers in their first 90 days without being liable for a personal grievance case.
Labour Minister Kate Wilkinson said the results showed the scheme had been especially beneficial to the targeted groups - young people and long-term unemployed.
The Opposition argued that the department's survey provided a lop-sided view of the scheme because it did not include the perspectives of employees.
The report found that two-thirds of the companies who used the 90-day trial did so to check an employer's suitability for a job before taking them on permanently.
A small number, 13 per cent, used the scheme to avoid incurring costs if the worker was unsuitable for the job.
The industry most likely to use the trials was the construction industry, with 85 per cent of companies hiring a worker under a 90-day agreement. Agriculture and forestry were the least likely industries to use it.
Researchers did not discover whether trial periods had reduced the number of employment relationship problems or legal cases.
The Labour Party's labour spokeswoman Darien Fenton said it was an unbalanced piece of research because employees had been omitted.
"What we don't see is the workers who are not able to stand up to this situation. If they're lucky, they get another job, but they still have to explain to their next employer what happened in the last job."
She said the change could increase the amount of people who carried the stigma of being sacked.
A Labour Government would repeal the change to the Employment Relations Act.
Ms Fenton said unions had been successful in some instances in negotiating collective contracts which excluded the 90-day trial.
The survey reported that 8 per cent of large companies had decided not to use 90-day trials because of union resistance to the scheme.
The Labour Department planned to examine employees' responses to the trials, with a report due later this year.
Companies with fewer than 20 workers have been able to use the scheme since March 2009.
90-day trial period
- 60 per cent of companies hired a worker under the scheme
- 85 per cent of construction companies have used the 90-day system
- 80 per cent kept a worker after the trial period
- 40 per cent would not have hired a worker without the scheme