Probationary Periods: What Employers Need to Know

Even the most effective recruitment processes cannot predict how well a candidate is likely to integrate into a business. In a recent survey, 81% of individuals polled admitted to lying in interview to get the job, while another survey from the Federation of Small Businesses (FSB) found that nearly one in five employers discovered candidates had given fraudulent references. Simply put, employers do not get the “full picture” until an employee has actually started working for them and the interview veneer has worn off.

Then comes the harsh reality that, in practice, almost one in five new employees fail to get past their probationary period or have their probationary period extended. Given these hard facts, employers are better positioned to deal with issues if the employment contract contains a well-drafted express probationary period clause.

In the absence of a probationary period clause in the employment contract, the employer will have to rely on the usual notice provisions to terminate the employment contract. This means it will be more expensive and potentially take longer to exit the unsuitable employee from the business, which effectively compounds an already negative experience for the employer.

In contrast, a well-drafted probationary period clause can assist the employer in the following ways:

• It provides both parties with an immediate, intense period in which they can evaluate the success of the relationship. Employees whose employment is subject to a probationary period are more likely to feel the pressure to succeed and, consequently, are likely to perform better.
• It helps manage expectations. Both parties go into the relationship mindful of the fact that if the relationship is not successful, either party can terminate it on short notice. It should therefore be less of a surprise if the employer turns around and says “this isn’t working”. Essentially, it gives both parties the opportunity to get out of the relationship quicker than with an employee who is not subject to a probationary period.
• It can prevent a situation where poor performance or misconduct is left unmanaged and the employee then acquires unfair dismissal protection. Once an employee has two years’ continuous employment, they have the right not to be unfairly dismissed, meaning it is more difficult and risky for the employer to seek to dismiss the employee. If an employee fails to pass their probationary period, the employer should be well-placed to demonstrate the employee’s employment was terminated for a fair reason.

A probationary period to-do list

Probationary period clauses can have some benefit to an employee who discovers the organisation is not as they expected, enabling them to leave on shorter notice. However, in the main, it is the employer that is most likely to have concerns about conduct or performance and therefore benefit from the inclusion of a well-drafted probationary period clause.

Employers who wish to include a probationary period clause in their employment contract should give consideration to the following points.

Terms of probationary period

Firstly, the employer should ensure the employee is aware of the probationary period, and what standards of conduct and performance are expected of them in order to pass their probationary period. The employer should also ensure necessary arrangements are in place to monitor the employee’s performance throughout the probationary period and diarise a performance review meeting before the expiry of the probationary period.

Length of probationary period

Employers who wish to include a probationary period clause in their employment contract should bear in mind that most probationary periods last for three to six months. While a probationary period of less than three months probably won’t give an employer enough time to assess whether a new employee is a good fit for the business, anything longer than six months might put an unfair amount of pressure on the employee.

Termination procedures

Regardless of the length of the probationary period, both parties should be able to terminate the employee’s employment on short notice during that time. For example, if the usual notice provision is three months, it may be preferable to have a one-month notice provision during the probationary period. It is about striking a balance between not wanting to have the employee around for long once the decision has been made to terminate their employment with having sufficient cover while trying to find a replacement for the departing employee.

Extending a probationary period

Of course, there will be some occasions where an employer might need a little more time to assess an employee’s suitability for the role. To that end, the probationary period clause should expressly state that the employer has the right to extend the probationary period by the same period again. If it doesn’t, the employee will be deemed to have passed their probation once the probationary period has expired, and the employer cannot then compel the employee to agree to an extension.

In those cases where the employer determines during the initial probationary period that it needs more time to assess the employee’s suitability, it should set out in writing the reasons why it is unable to confirm the employee in their role. If there are particular issues that need to be addressed or targets that need to be achieved, the employee should be notified of these in writing. The employer should also stipulate the revised date for the end of the probationary period.

Putting it in writing

The probationary period clause should expressly state that the employee will not be deemed to have passed their probation unless they receive written confirmation to that effect from the employer. Otherwise, the probationary period may inadvertently lapse and the employer will not be able to extend the probationary period. It is also likely to encourage the employee to raise the issue of their probationary period if the employer happens to have forgotten about it because the employee is likely to want to have their position confirmed.

Likewise, should an employee not pass their probationary period, it is advisable to explain to the employee where things have gone wrong and to keep a written record of this. This should assist the employer in demonstrating that the employee’s employment was terminated for a fair reason and not, for example, for a discriminatory reason. Copies of minutes from meetings with the employee and a letter to the employee recording the outcome of the probationary period should also be retained on the employee’s personnel file for safekeeping.

Ultimately, a well-drafted probationary period clause will protect employers in the unfortunate event that the person they hire doesn’t match the person they met in interview.

About the author

Michelle Last is a consultant solicitor at Keystone Law, specialising in employment law. She is a regular contributor to the press and has been published in The Times, The Financial Times, The Sunday Times, HR Director and Personnel Today, among other titles. Last is frequently ranked as the “most viewed” employment law solicitor and regarded as a “thought leader” on LinkedIn.