KAZ exploits 3 month ‘probation’ loophole.

The government made a law that required employers to employ a prospective employee for a 3 month ‘probation’ period. This meant that during this time, the employee could get sacked without any repercussions to the employer.

The IT industry is generally an outsourced industry with both full time and contract employment. Professional employment within the IT industry is usually handled via agencies.

Agencies can charge a fee of a few hundred dollars, for a successful placement of a contract candidate, up to anything between $5,000 to $10,000 for a full time professional.

One way to exploit the system is that a firm may have a contract position that they outsource to the clients. As a contract position it may be worth $90-$100k to the contractor, and if it were full-time staff employment, it would be $50-60k. Instead of contracting it out, the company hires the employee as a permanent full-time, through an IT agency. If the employee gains successful employment, the IT agency then requires a service for providing the employee, for the sum of $5-10k. Successful employment is based upon the 3 month probation period.

A quick financial calculation will show that if a company hires a contract position at the full time rate, changing employee 4 times per annum (by not paying the agency, using the three month exploit) they can save : 40K salary + (4 x $10k) = $80,000 maximum, on the one position.

KAZ hired a person for a full time position, then terminated their employment, on the day the three month probation period ended. The excuse given was that it was performance based (which can be easily fabricated internally), but since this person was mainly on-site, the references received from the customer were quite the opposite.