Probationary periods, these times they are a changing.
Probation periods have always been important to allow employers to trial new employees but some employers see the first two years as a trial because currently employees don’t accrue unfair dismissal rights until they have 2 years continuous service.
A different approach, with a new Labour government, likely means the probationary period will become more important than ever, when Labour introduces unfair dismissal as a day one right.
While we don’t have the details yet, ‘Labour’s Plan to Make Work Pay’ says that the new unfair dismissal right from day 1 of employment:
“will not prevent fair dismissal, which includes dismissal for reasons of capability, conduct or redundancy, or probationary periods with fair and transparent rules and processes. We will ensure employers can operate probationary periods to assess new hires. However, the changes will help to ensure that newly hired workers are not fired without reason or cause and will help drive up standards in workplaces.”
‘Labour’s Plan to Make Work Pay’, https://www.workforlabourplp.org.uk/
So, while the devil will be in the detail the brave new world will still include probationary periods but there may be some additional procedural hoops to jump through requiring employers to notify employees of the reason or cause for them failing probation, to avoid unfair dismissal. Many employers will already be doing that, as part of their probationary procedures. But not all currently do and the last minute dismissal at the end of the probationary period, with no meeting or communication with the employee about their performance, could well result in a unfair dismissal.
Whether this is limited to a right to ‘know’ the reasons for dismissal or it translates into a right to reply before a decision is made, remains to be seen.
Equally, will a procedural defect alone in any new ‘fair probationary procedure’ give rise to an unfair dismissal and if so, how much will a claim for unfair dismissal be potentially worth, if dismissal takes place during the probationary period?
The current law on ordinary unfair dismissal caps compensation at one years gross pay for most people. That’s arguably disproportionate and may result in more disputes or claims, if employees believe they might win up to a years’ pay in the case of a probationary period unfair dismissal.
Let’s see if the new government introduces a lesser cap of say one to three months pay. That might reduce disputes, where an employer guilty of an unfair dismissal elects to settle within or up to the cap, rather than spend time and money defending the claim. Of course it would be better to get the procedure right in the first place. And whatever changes in terms of unfair dismissal law, a disgruntled employee may still claim their dismissal was discriminatory.
Human Resource professionals should find this brave new world pretty straightforward although those companies that currently take a more informal approach might need to go through a period of adjustment to a more formal and possibly time consuming onboarding and probationary procedure.
Probationary Period FAQs
What is a probation period?
It’s a trial period at the start of employment allowing the employer to assess an employee’s suitability.
Are probationary periods compulsory?
There’s no requirement to have a probation period but most employment contracts will include a probation period.
An employer may not bother with them, on the basis that employees currently need two years’ service to accrue a right not to be unfairly dismissed, even though there are other claims such as discrimination, that have no minimum service requirement.
For senior appointments, an employee may negotiate the removal of a probation period. Likewise, where an existing employee is promoted with a new contract, it is not uncommon for the new contract to confirm no probationary period will apply, although that is not always the case.
How long is a probation period?
The length of a probationary period should be set out in the employment contract. Typically they are between 3 and 6 months.
Can a probation period be extended?
Usually the employment contract will allow an extension. Sometimes a maximum period is specified. The purpose of an extension is to allow more time to assess the employee’s suitability, when the employer is unsure.
What happens if an employee fails probation?
The employee’s employment will likely be terminated.
What notice period applies during the probation period?
The notice period should be specified in the employment contract. Often, the notice the employer must serve during the notice period is shortened in comparison to the notice period after probation is passed successfully. For example, the employment contract may confirm its one week during probation, rising to one month afterwards.
Must the employment contract refer to a probationary period?
A written statement of employment particulars must include any particulars of any probationary period. ( See Section 1(4)(ga) of the Employment Rights Act 1996).
Is there any obligation to extend a probationary period?
Usually there will not be a requirement to extend but the employer will have the option to do so. An Employment Appeal Tribunal case decided that there was no right to an extension to enable the employer to give the employee an indication whether it was completed successfully, or not. However, on the facts of the case, the employer concluded the employment after the conclusion of the probationary period, resulting in the employee being entitled to 3 months notice rather than one week, under the employment contract.
Can an employer extend a probationary period if the contract doe not mention an extension?
An employe could not impose an extension but it could seek to agree an extension with the employee. If the employee refused, the employer might decide to end employment before the probationary period ends. If the employer is able to serve shorter notice in the probationary period, it may be in the employee’s interests to agree an extension.
How long is reasonable to extend the probationary period?
Subject to the contract terms, there is no limit to how long a probationary period could last. However, if extensions go beyond the first years this is arguably unreasonable, and could give rise to claims the employer has not exercised its discretion reasonably in accordance with the implied terms of trust and confidence. And in any event, currently, an employee will accrue a right not to be unfairly dismissed on reaching two years service. It may be the envisaged changes in the law making unfair dismissal a day 1 right, result in the a statutory cap on the maximum length of a probationary period. Watch this space!
What is the effect of sickness absence during the probationary period?
Usually this would not automatically extend the probationary period. So, if the employee hasn’t spent sufficient time in work to assess suitability, the employer should take care to extend in good time, where the contract allows, or seek to agree an extension where it doe not, especially where the notice period increases outside the probationary period.
In some circumstances, where the absence is disability related, it may be argued that failing to extend the probationary period, amounts to disability discrimination. Depending on the facts, it may be argued that sufficient time in work had elapsed to enable an assessment. In such cases, employers should be ready to evidence and justify their reasons for concluding the employee was not suitable, if challenged.
Does the Acas Code on Disciplinary and Grievance Procedures apply during the probationary period?
The Code is not disapplied during the probationary period. Therefore, if a dismissal was found to be discriminatory, or an automatic unfair dismissal due to the employee’s performance or conduct, a failure to follow the code may result in an uplift in compensation of up to 25%.
For this reason, an employer might decide, depending on the circumstances, to follow a basic procedure that mirrors the Acas Code, or gets close to doing so, when dismissing during the probationary period.
Does an employer need to follow its disciplinary procedure to dismiss for misconduct, during the probationary period?
Some disciplinary procedures will state the employer is not required to follow its own procedure during the probationary period. If the disciplinary procedure forms part of the employment contract, and it does allow the employer to depart from its disciplinary procedure during the probationary period, a failure to follow the procedure could give rise to a breach of contract claim.
What is the probationary period process?
A good probationary period process will usually include the following:
- Communicating to the employee the existence, purpose and length of the probationary period;
- A period of assessment, with the employer learning about the employee’s performance, skills and attitudes, to assess suitability.
- Ongoing feedback – this may be in informal catch-ups, 1-2-1 meetings, and supervisions.
- Probationary meeting(s) – towards the end of the probationary period, although there may interim meetings, to formally discuss and ultimately communicate how the employee is doing, and whether they have passed probation, or failed, or whether the probation is the be extended.
- Written confirmation of the outcome of probation, with a record kept on the employee’s personnel file.
What are the common mistakes employer’s make?
- The probationary period passes by default, without any active decision or communication.
- A manager is aware early on that the employee is not meeting requirements but does not bring that to the employee’s attention. Then, at the eleventh hour, just before the probationary period is due to end, they communicate the bad news. The employee is surprised, upset, and may feel aggrieved that they were not advised of the concerns earlier, or given time and support to improve.
- The employer terminates during probation but gives no reasons, or vague reasons. The employee is left wondering what they did wrong, feels badly treated, and is more likely to raise complaints or claims that might have been avoided by a fair and transparent process.
- The employee misses the deadline to extend. That leads to a dispute, and possible claims, if the employer terminates with the shorter notice permitted during the probationary period, as the employee argues the extension is invalid and they are entitled to the longer notice period provided for in the employment contract.