Are probationary periods working for you?
Do you use probationary periods for new employees? Are you confident you’re using them correctly and getting the most out of them? Julia Gray comments on their use and highlights common mistakes made by employers.
The purpose of a probationary period is to provide an opportunity to assess the suitability of a new employee and to part company with them more easily if they are found to be unsuitable. A probationary period is advisable for almost any new employee. The main exceptions would be very short-term contracts and very senior appointments. There are two crucial requirements that need to be met for an employer to be able to take advantage of a probation regime: first, the terms need to be included in the employment contract and clear to everyone concerned; and second, managers must properly engage with the process and make a conscious, rational and evidence-based decision at the end of it.
TIP: The probationary period should be in place before the employee starts work – once the contract is in place, it may be too late. And remember that the right to a written employment contract becomes a day-one right from 6 April 2020.
Terms of probation
The length of probation will depend on the nature of the job and how long it will take to assess the employee’s performance – commonly it lasts between one and six months. The key feature of the probationary period is that it provides for shorter notice, allowing the employer to terminate the employment contract more quickly (and possibly more cheaply). Other rights under the contract
can also be subject to the successful completion of a probationary period, for example contractual sick pay. If the employee successfully completes their probation, they move to a standard set of contractual rights, including a longer notice period.
A probation clause should set out, as a minimum, how long probation will last, what notice will apply during that period, and the implications of passing or failing.
If you’d like to have the option of extending the probationary period, the employment contract must provide for that. Remember, although the probationary period allows for shorter contractual notice, the employee is still entitled to minimum statutory notice under the Employment Rights Act (one week’s notice after being employed for a month).
It’s important that the employee understands the probationary process from the outset. They need to be clear about any specific goals that they are expected to achieve and when any progress meetings will take place.
TIP: Don’t wait until the end of the probationary period to consider whether an employee is under-performing.
Managers should feed back to the employee during the probationary period on their progress and whether they are meeting expectations. For this purpose, it’s good practice to fix meetings at regular stages throughout the probationary period. A record of feedback and the outcome of probation should be kept on the employee’s file and a copy given to the employee.
At the end of the probationary period, the employer has three options:
- to confirm the employee in employment where the probation has been successful
- to dismiss the employee where the probation has been unsuccessful
- where there’s a contractual right to do so, to extend the probationary period.
TIP: Don’t let the end of probation come and go without being addressed, as that may result in an unsuitable employee successfully completing their probation “by default”.
The outcome needs to be communicated to the employee (giving notice to terminate employment if necessary) before the end of the probationary period. If you’ve decided to extend the probationary period, the employee needs to be able to understand what aspects of their performance are letting them down and what they will need to do to prove themselves in the further period of probation. It will be important for the process of feedback to be maintained and the employee should be clear on the end date. Extending probation can be particularly useful where the employee has been absent for a significant part of the probationary period, for example due to illness.
If you would like to extend the probationary period but you don’t have a contractual right to do so, you could invite the employee to agree to vary their contract to provide for an extension. He or she may be willing to agree to this if they think it’s their only opportunity to keep their job and that refusing might result in dismissal at the end of the initial probationary period.
Terminating employment after unsuccessful probation
An employee who has been sacked must have accrued two years’ service before they can bring most types of unfair dismissal claim. That means that by the time notice expires following the end of a probationary period, an employee won’t usually have sufficient service to bring a claim.
For that reason, many employers opt not to follow their normal policy (or the Acas Code*) when they dismiss an employee with notice at the end of their probationary period. That approach is not without risk. The minimum service requirement for unfair dismissal claims doesn’t apply to several other types of claim, including claims relating to discrimination and whistle-blowing. When an
employee has been absent for a significant proportion of their probationary period, the manager might have insufficient information on which to base a final decision. The level of absence itself might act as a deterrent to confirming the post permanently. However, if an employee fails their probationary period for a reason connected to a disability, maternity, or other protected characteristic, then they would have grounds to bring a discrimination claim.
Where an employee would otherwise fail their probation due to absence, employers should therefore consider giving them another chance to prove themselves by exercising their contractual right to extend probation or, where there is no contractual right to do so, offering an extension as described above.
TIP: Don’t assume that dismissing for a failed probation is always low-risk.
Apart from the possibility of discrimination and whistleblowing claims, if your disciplinary/capability policy is contractual, you need to consider that failing to follow it could result in a breach of contract claim by dismissing without following due process. It is usually advisable to follow some degree of procedure in dismissing during a probationary period, even where there is no contractual requirement to do so and you are confident that the reason for dismissal is unrelated to discrimination, whistleblowing and any of the other claims that can be pursued without two years’ qualifying service. Doing so provides an evidence trail supporting your motivation for dismissal if you’re challenged.
Alternatives to probationary periods
Probationary periods are not the only way to assess a new employee’s suitability for work; a rigorous recruitment process can involve not just an interview, but an opportunity for the candidate to demonstrate their skills and attitudes. Whilst there is a growing trend towards trial periods as part of recruitment exercises, concerns have been raised that candidates can be taken advantage of, essentially as a source of cheap or free labour.
To address such concerns, Government guidance issued earlier this year includes a section to help employers identify where trial periods trigger employment rights such as the national living/minimum wage . The guidance identifies as a “key consideration” the length of the trial and says that in all but very exceptional circumstances, anyone doing work in a trial lasting more than one day is likely to be entitled to the national living/minimum wage.
If you’re an employer not already using probationary periods, now might be the time to start. If you already use them, it may be time to review how effective they are and whether any changes are needed to your current practice. Consider asking managers to feed back about their experience of probationary periods and whether they need any support or training to make them more effective.
* the Acas Code of Practice on Disciplinary and Grievance Procedures provides the principles of, and basic practical guidance for, handling disciplinary and grievance situations in the workplace, which are taken into account by employment tribunals https://beta.acas.org.uk/code-of-practice-on-disciplinary-and-grievanceprocedures