Probationary Periods and the Contract of EmploymentPosted in : Essential Guide to Employment Contracts on 21 November 2016
Probationary Periods - Is it a requirement?
There is no statutory requirement to include a probationary period in a contract of employment. However, it is a useful tool to manage new or newly promoted employees. There is no automatic or implied term in a contract for a probationary period so it must be stated as an express term. Case law has determined though that where there is a probationary clause in a contract that it implies a promise of positive help and guidance to help an employee achieve the expected standard (White v London Transport Executive  IRLR 261, EAT). Employers must be able to show that they took reasonable steps to appraise the employee on probation and that they made honest efforts to determine his suitability (Post Office v Mughal  IRLR 178,  ICR 763, EAT).
What terms and conditions apply during probation?
Employers should clearly set out what terms do and do not apply at this time. It is common for employees not be enrolled in benefits schemes until completion of the probationary period. Employers should be careful that such exclusions are not discriminatory. They will still be obliged to grant family-related leave, recognise pregnancy and maternity rights and consider reasonable adjustments for disabled employees on probation. Holidays accrue and employees are entitled to the national minimum wage and statutory sick pay.
How long should the probationary period be?
There is no set period of time for a probationary period. A less skilled or more junior job may only require a short period of time for the employer to assess competence for work whereas a senior role may require the employee to fit in culturally and show leadership, both of which may take much longer. Consistency should be applied across similar roles.
What needs to be covered in a probationary clause?
Employers may apply a different notice period during probation than that which applies once probation has been completed. It should however, continue to comply with statutory minimums. Employers will have to ensure there is no conflict between the probation and notice clauses.
Employees have to complete at least one months’ service to be entitled to minimum statutory notice of one week. Again where an employer wishes to rely on this it should be specified.
- Specify the circumstances of completion
It is a good idea to set out how notification of successful completion will take place otherwise employment may be automatically confirmed in circumstances where an employer has simply missed the deadline, causing uncertainty and disputes.
- Reserve the right to extend where necessary
It is good practice to keep and employee notified of their progress and to give guidance on aspects of performance which are not meeting the required standards. Any extension should be notified in good time before the end of the period and expected improvements set out. The extension period should also be confirmed.
- Not entitled to full period of probation
Employees are not entitled to work their full probationary period before any decision on suitability for the role is reached. However, to avoid confusion a clause should state that failure to achieve satisfactory standards may lead to dismissal at any time throughout the period.
Where an employee is promoted, it should be outline in their letter of offer where a period of probation applies and what happens in the event that the employee is unable to meet the required standard – can they return to their previous role?
Employees can be fairly dismissed during their probationary period. In theory there is no sanction for failure to follow the statutory procedures on disciplinary and dismissal as the employee will not have the qualifying service required to allow them to bring a claim for unfair dismissal. However, this does not take account of circumstances where a minimum qualifying period does not apply – cases of discrimination, whistleblowing or assertion of a statutory right such as bringing a grievance. Although the employer may not have dismissed on the grounds of a protected characteristic, if an employee can at least establish that they have a protected characteristic the employer may face having to deal with the cost of a tribunal claim even if they can successfully defend it. It will also be harder to defend an alleged dismissal for asserting a statutory right if the grievance has not been investigated.
Failure to follow procedure can be tagged on to any dismissal on the grounds of a protected characteristic regardless of qualifying period of employment. Employers will have to balance the administrative burden of completing the statutory procedures against the risk of an uplift in the event of a finding of unfair dismissal.
Breach of contract / wrongful dismissal
Some disciplinary, performance or capability procedures are contractual. If these are not followed or excluded in a probation clause, an employee may allege breach of contract and be able to claim wrongful dismissal. There is no minimum service required to bring a claim for wrongful dismissal and an employee will be entitled to compensation for all the benefits that he would have received had he remained in employment until the end of his notice period.
The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.