1 October 2007

Employment is frequently offered subject to an initial trial period during which time the suitability of the employee can be more accurately assessed. A probationary period can help you decide if the employee is worth it but what should employers be doing to ensure the probationary period is worth their while?

Firstly, the length of any probationary period should be of reasonable duration to allow the new employee to demonstrate their suitability and capability. In most cases a term of either 3 or 6 months is adequate although, exceptionally, a probationary period can apply to the first year of employment. Probationary periods do not normally exceed one year as after this time the employee will be eligible to bring a claim for unfair dismissal and a tribunal will expect an employer to have followed the established principles and procedures for a fair dismissal. However, it is important to note that probationary periods, even of one year or less, do not negate an employee’s statutory rights and an employer will still be exposed to legal risks, for example, claims of discrimination or breach of contract.  

A suitably drafted clause should be included in the contract of employment to make it clear that the appointment is conditional upon the satisfactory completion of the probationary period. A probationary clause should contain an express right to extend the probation in circumstances when the employer deems a longer period is necessary to evaluate the performance. For instance, if the employee has been unable to perform their duties for a significant part of the initial period through illness or other authorised leave. This provision may also be relied on when an employer has some reservations, but the indication is that the employee could pass the probationary period, and, where the employer is willing to provide the additional time and support needed to enable the employee to achieve the standards expected. Where an employee is failing to achieve the required standards, the clause should enable the employer to terminate the employment at any time during or at the end of the probationary period.
 
In addition to excluding the employee from the disciplinary procedure, employers can take advantage of a probationary period to restrict an employee’s right to certain benefits and terms and conditions, until their employment is confirmed as permanent. For instance, if the normal terms of employment provide for a contractual period of notice which is longer than the statutory minimum, the employment contract can include an overriding provision stating that during the probationary period the notice which either party is entitled to receive will be one week. Employers can also agree an initial starting salary and confirm an increase once the probation period is passed and specify that the employee will not be entitled to receive Company Sick Pay during the probationary period. Employers can no longer state that the employee is not entitled to receive holiday during the probationary period. Under the Working Time Regulations, during the first year of service, an employee is entitled to accrue one-twelfth of the statutory minimum holiday at the beginning of each month. If the employee is not permitted to take this holiday during the probationary period, he will still be entitled to be paid an amount in lieu if employment is terminated during or at the end of the probationary period.
 
From a practical point of view, employers should ensure that the process to be followed during the probationary period provides the employee with the necessary information and support to enable them to become competent in their role. The initial days or weeks in the new position should consist of an induction into the Company and an explanation of the standards expected, including health and safety, equal opportunities and the disciplinary rules. The new duties must be explained fully and the employee should receive any necessary instruction or training and be clear on the standards of performance which are expected.  The employer should ensure the employee understands the terms and conditions of employment and the procedure that will be followed to assess, and if necessary take action, during the probationary period.  

Once the induction is completed, a probationary review process should consist of regular meetings with the employee’s manager to encourage the employee to raise any concerns they may have and to provide feedback on their conduct, attendance and job performance and agree any action to be taken. The employee should be kept aware of any improvement required for satisfactory completion and warned of the consequences if the standards are not met. Prior to the date on which the probationary period is due to end, the employer should meet with the employee to formally confirm if they have passed their probation, or if the period is to be extended or their employment terminated. It is advisable to incorporate the statutory dismissal procedure into the probationary process even though an employee does not have a freestanding right to bring a claim for breach of the statutory procedures. If they have grounds to bring another claim e.g. discrimination, any compensation awarded for their claim could be increased by up to 50% for the employer’s failure to follow the statutory procedure.

Employers should keep accurate records of the employee’s progress and diarise the dates to ensure that any action is taken before the probationary period expires. In Przybylska v Modus Telecom Limited (2007) the employer had a 3 month probationary period with an express right to extend this period and to terminate the contract during the initial or extended period on one week’s notice. The employee was on holiday when the 3 month probationary period expired and, prior to her holiday, had not been informed of the outcome of her probationary period. However, when the employee returned to work she was told she had not passed her probation and was dismissed on a week’s notice. The employee brought a claim for breach of contract for the three months notice that she was entitled to after the probationary period, on the basis that the employer had not dismissed her in the first 3 months or exercised its right to extend the probationary period. The EAT agreed that a term can not be implied to the effect that the probationary period is automatically ongoing where the employee receives no indication to the contrary, and in order to rely on its contractual  rights, the employer had to exercise this discretion in the initial period.
 
Whilst the probationary process can provide an easier route of escape when the wrong recruitment decision is made, probationary periods should be regarded less of a legal issue and more as practical tool, which aids the retention of new recruits by ensuring that they are given all the support and resources to succeed in the role.