A recent survey has revealed that a fifth of new employees fail their probationary period or have this period extended. However, employers should be mindful of the potential pitfalls in relying too heavily on probationary periods.
What are probationary periods?
Probationary periods are included in the employment contract and allow an employer to dismiss an employee on giving only a short amount of notice during the first few months of employment (although employers should make sure that notice given during the probationary period is at least as much as the statutory minimum notice period, which for new employees is not less than one week's notice).
They therefore allow employers time to assess an employee's suitability for a role early on in the employment relationship safe in the knowledge that the employer can easily end the relationship if it is not working out. Indeed, capability appears to be the most common reason for employees to fail their probation, with 62% of managers in one survey citing it as the reason they had used for not passing an employee's probation. Other common reasons are absence, lateness and sickness.
For many companies, probationary periods have become standard for all but the most senior employees. Whilst probationary periods allow employers to take greater risks in the recruitment process they are not without their downsides. A recent survey indicates 18% of new employees fail to pass their probationary periods, which means the employer has gone through a costly recruitment and induction process for nothing, and adds to the disruption already faced by the employer's existing team.
In addition, probationary periods need to be long enough to enable an employee to properly settle into the organisation and role, but not so long that the employee gains employment rights which undermine the very versatility the probationary period is designed to give.
Ending the probationary period
In many cases, an employee's probationary period will simply come to an end automatically, and if no action is taken by the employer, the employee will remain as a permanent member of staff.
Probationary periods in the employment contract should, therefore, be carefully drafted, perhaps to provide that the end of a probation period must be confirmed to the employee in writing, to avoid a poor performing employee automatically passing their probationary period and becoming entitled to an increased amount of notice. It is also useful for probationary periods to be drafted so that an employer has the ability to extend the period if a longer period of time is needed to properly assess an employee's performance. If the period is extended it is best to inform the employee in writing of what improvement is required as well as the new end date of the probationary period.
Where an employee has moved internally and enters into a new contract, they may have already accrued more than two years' service and therefore the right not to be unfairly dismissed and also increased entitlement to notice. A probationary period may nevertheless be useful to ensure that the employee has the correct skill set for the new role, although employers will need to consider how such a probationary period will operate in practice. For example, rather than an employee being dismissed if they fail probation, it may be more appropriate to allow them to return to their previous role on their previous terms and conditions.
Employees on probation will usually not have the two years' continuous service required to bring a claim for unfair dismissal. However, employers should always consider whether failing an employee's probation could give rise to claims of automatic unfair dismissal (e.g. where an employee states the reason for their dismissal is because they have blown the whistle or asserted a statutory right) and / or cases of unlawful discrimination (e.g. where an employee's absence or poor performance during the probationary period is caused by a disability).
Even where an employee is to be dismissed during or at the end of their probationary period, it is advisable to go through a form of disciplinary process with them, or follow any contractual capability procedure, prior to dismissal in order to make the reasons for dismissal clear. This will not only ensure that the probationary period is used for its proper purpose of developing employees in their new role, but will also reduce the likelihood that any subsequent dismissal is automatically unfair and/or discriminatory.