Probationary periods – should I scrap them?

Probationary periods are used by employers of all sizes for new recruits, usually for either three or six months. They can be extremely valuable if used well, bringing structure to the early days of a new hire’s employment, and prompting decisions about whether there is a good fit.

But there is a growing movement in favour of ditching probationary periods altogether, and it is worth giving some thought to whether it would be sensible to do the same in your business.

Whilst probationary periods can be a useful management tool, there are negative connotations. The whole sense of taking part in a three or six month ‘test’ doesn’t feel a very positive experience, being under scrutiny and having your employment almost held over your head, while someone assesses whether you might pass or fail. Even the “pass or fail” terminology makes the whole thing feel more stressful than it needs to be.

The early period of employment should be about building a relationship and encouraging and developing good performance, rather than treating it as an extension of the job interview.

What are the implications of scrapping probationary periods?

Probationary periods have no legal standing at all. They are purely contractual between the employer and employee. There are no additional legal rights granted to the employee upon passing a probationary period, and ordinarily, the main, or only, difference between being in a probationary period and having passed it, is that a longer contractual notice period often applies. Some employers also withhold some contractual benefits until probation has been passed. This means that in the event the employer decides not to continue with the employment, it is no easier to terminate whether there is a probationary period or not. The advantages of a probationary period can therefore potentially be replicated without a probationary period in place. Notice periods can be scheduled to change at, say, the six month mark, and benefits can be withheld if desired.

A good structure can be developed to manage and encourage performance in the early period of employment, without calling it “probation”, and with a more positive feeling focus and energy.

What is absolutely essential is that, if you choose to scrap the probationary period, you don’t replace it with nothing. It’s vital to have some structure in place for managing the early months of employment, to ensure everything possible is done to support the employee achieving the standard of performance you need. You need managers who are well-trained and proactive in supporting and developing team members, and a system of regular meetings and a tailored induction programme.

Some managers might be more inclined to actually do the important stuff if it is framed as a probationary period, and that’s ok. In short, it’s the substance and essence of a good initial few months of the employment relationship that matter, and those are the same whether you call it probation and operate a pass or fail system, or whether you ditch that terminology altogether.

What elements of a contract change after probation and how do you manage the transition from a contractual perspective?

Employment rights Employees who are serving a probationary period have the same statutory rights as any other employee. Statutory employment rights either apply from day one or are dependent on length of service – probation status makes no difference. This means dismissing someone within their probationary period is no easier than once they’ve passed it, although often a longer notice period will apply.

Contractual benefits Other than things like holiday entitlement and pension, contractual benefits are purely between the employer and employee, therefore many employers choose to withhold certain contractual benefits until probation has been passed. As long as this is clear in the contract of employment, that is perfectly fine to do. There is often an administrative burden involved in contractual benefits, and some are not things you can easily cancel, such as gym membership or private healthcare, so some employers prefer to wait until there’s more certainty before offering these.

Pension

Pension is slightly different in that employees are entitled to be auto-enrolled into a pension scheme, and probation can’t be relevant. What you can do is postpone auto-enrolment for up to three months, which obviously coincides at least partially with a probationary period.

Notice periods It’s really common for contractual notice periods to increase once probation has been passed, so that employers (and, in fact, employees) can terminate the contract with relative ease and at low expense if it becomes clear things aren’t working out.

Extending probation Obviously ideally you’ll be sure enough by the time probation is approaching its end whether the employee is a good fit. But sometimes for whatever reason, a longer period is needed. Perhaps there has been illness or other absence during the period, a disruption to training or other support, or performance concerns that are being addressed but not enough time has been given yet to assess whether improvement is sufficient.

If you don’t have provision to extend probation in the employee’s contract, doing so may be a breach of contract, so it’s important to include that. Extensions should not be for too long, and extending multiple times is not advisable or particularly fair on either party. Make sure you confirm the extension in writing, as the probationary period (and relevant terms and conditions) is part of the contract, and is something you’re varying through the extension.

End of probation issues A common contractual issue with probationary periods is actually lack of clarity about whether the period has ended or not. It’s really common for busy managers to let things ‘drift’ and suddenly the end date for probation has been and gone before a review has been conducted or anything done about extension, if that is what is required.

In many cases, the simple fact of the time passing will mean the probationary period has been passed by default. It’s not possible to extend probation once it has been passed, and, whilst this doesn’t represent a problem in terms of dismissal, as statutory rights aren’t increased, obviously any other terms that change on passing probation will now be in effect, with a longer notice period being particularly relevant.

You can address this to some extent through wording the contract so as to make clear that probation is not deemed to have been passed until specifically confirmed as such, but clearly a much better solution is to make absolutely sure that reviews are conducted in plenty of time, so that the situation doesn’t occur.