Nothing wrong with that at all. He is even giving you fair warning that during this period you will be observed. Informal observations should be normal, in my opinion, and part of the overall appraisal process. The head gets to see what you are truly like, rather than just a one-off prepared for lesson. Not sure which highly unionised country you refer to, but they are rare on the international front. Those that "scream unions" don't make good expat teachers.