How can a probationary period help your business?

Apparently, 88% of employers regret at least one recruitment decision they’ve made in the past twelve months. The main problems are because they:

(1) aren’t up to the job;
(2) lack skills; or
(3) have other poor performance issues, e.g. bad timekeeping, or a combination of all three!

New legislation and the counter-argument

It’s been suggested that probation periods are pointless because new employees can only claim unfair dismissal once they’ve accrued two years’ continuous service. So should you bother with them or not?

As you can now dismiss a new employee before the two-year mark without any fear of them bringing a successful unfair dismissal claim, it’s been suggested that putting a probationary period in the employment contract is a “pointless” exercise for employers. Apparently, this is because “you can now just get rid of the employee during the first two years no matter what the problem is”. So is this true?

From a legal perspective, you can’t do what you like to a new employee during a probation period or otherwise.

Whilst they may not have the right to claim unfair dismissal for two years, they do have other rights from day one of employment, e.g. the right not to be discriminated against due to race, pregnancy, etc., the right to a notice period and to holiday pay. So if you were to sack a new hire without a good reason you may still find yourself on the end of a tribunal claim, particularly if they have a protected characteristic.

An initial probationary period typically lasts for anywhere between three and six months; you’re free to set its duration. In theory, provided you conduct it properly, this should be enough time to fully assess a new employee’s suitability for a role. However, if they fail to complete it to your satisfaction, you can terminate their employment.

Advice

We always advise our clients to go for six-month probation – it gives you three months to get them up to speed and then another three months to assess their ability to maintain the required standard.

When an employee is on probation, it’s perfectly acceptable – and probably advisable – to put a much shorter notice period in their employment contract. For example, you could reduce it to one week instead of one month. That way, if they’re not working out, you can remove them rapidly and more cheaply.

The key to successful probation periods – and you being happy with your new employees – is proper performance management from day one; this can prevent many problems from arising in the first place. Never assume that a new hire will know what’s expected of them, even if they’ve done a similar job before or you went through it in the interview. Sit them down and explain it in detail within their first week of employment.

But don’t leave it there. Arrange regular review meetings during the probationary period and provide training or support if needed. Fail to do this and you’ll be storing up problems; it could also allow them to bring a tribunal claim.

If you’re not confident about a new hire’s employment, but think there’s room for improvement, you can extend their probation period, provided you previously retained the right to do this at the start of employment. Make sure though that you confirm this arrangement in writing – making clear the required standards, when you are going to review and confirming the possible outcome of not achieving. (To make things easy for you, we have such a letter already on in our Online HR Toolkit).

Benefits

Formal probation periods – which tend to last anywhere between three and six months – offer you a number of benefits. Firstly, with a carefully worded probation period clause you can provide for a much shorter notice period throughout the entire probation period, e.g. one week (or even less during the first full month of employment). Secondly, your new employee will be aware that their performance is under constant review and they are at risk of losing their job if their conduct or performance isn’t up to scratch.

Tip 1. If their position is confirmed at the end of the probation period, they’ll be used to performance reviews on conduct, sickness absence, general attitude, etc., and continued monitoring won’t be any surprise.

Tip 2. Where you do dismiss a new hire because they’ve fallen short of the mark during their probation period, you’ll be able to fend off a discrimination claim if you had good work-related reasons to sack them. However, in order to gain that protection, you must manage the probation period carefully.

Tip 3. Ultimately, it’s your choice whether to use probation periods. However, they send a clear message to new hires that they don’t have a guaranteed job until they’ve proved their suitability.

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