Probationary periods in employment – an overview of the implications and potential pitfalls
Probationary periods are a common feature of employment – but what exactly are the implications of one?
The idea of probationary periods is simple enough – they provide a period of time in which the employer and employee can see what it is like to work with each other and if either party isn't happy, they can terminate the contract on minimal notice and move on.
However, there is no statutory or common law right to a probationary period and no common legal process setting out how they should be performed. They are entirely the creation of the employment relationship between employer and employee which means that, in reality, a 'probationary period' is really an umbrella term that can vary from employer to employer.
What does this mean in practice?
Drafting an appropriate probationary period clause for the employment contract is tricky. On the one hand an employer could clearly set out how the probationary period works to suit the specific job or role and make clear on what basis an employee will pass it or fail it. On the other hand many employers will avoid doing this to limit the risk of a breach of contract claim. Another problematic issue is the time and attention required - one role can be so different to another, even within the same organisation, that bespoke drafting might be required for each role. In practice, some employers still fail to provide any contract at all.
It is therefore not too surprising that the use of generic and vague references to a probationary period have become widespread.
Why does this present a problem?
A probationary period should not present a problem to employers who actively monitor and manage new employees. However, either due to oversight or lack of resources, many employers will not do so.
Consider a busy employer who checks various metrics towards the end of a probationary period and finds that the employee on probation is falling well short of expected standards. The employer has a small window to take advantage of the shorter length of notice commonly provided for during probation, but also realises the identified performance issues have not been raised with the employee and they won't get the chance to raise them in the window available.
An employer could take the view that, even if the employee felt the decision was unfair, there is no real prospect of an unfair dismissal claim due to a lack of service. Further still, because it is implied by a probationary period that the employee's performance is monitored, even if no reason is given at the time of dismissal it is arguable that the dismissal is for 'performance reasons'. Might an employer be tempted to think 'why take the time to explain the reason? Why not just dismiss and simply state 'performance reasons'? or give no reason at all?'
How risky is it to dismiss an employee during their probation without giving reasons, or for vague reasons?
This approach raises far greater risks if the employee has done a protected act or has a protected characteristic, giving them a potentially automatic unfair dismissal or discrimination claim which does not need a qualifying period of service. Here, the dismissed employee could understandably be suspicious of their employer's motives and bring a claim.
Even if the employer is comfortable the real reason for dismissal falls under one of the potentially fair reasons for dismissal (e.g. conduct, capability or some other substantial reason), if the employee has not been actively managed, it will still seem suspicious to the employee to be told they are dismissed for 'performance reasons'.
Automatic unfair reasons for dismissal do not require the employee to have two years' continuous employment to qualify to bring a claim. Even if the employer was acting reasonably the following reasons for dismissal are automatically unfair, including dismissal during a probationary period:
- pregnancy and maternity;
- family matters, including parental leave, paternity leave (birth and adoption), adoption leave and time off for dependants;
- acting as an employee or trade union representative or trade union membership;
- being a part-time or fixed-term employee;
- asserting statutory rights relating to pay and working hours, including annual leave and the National Minimum Wage; and
Consider an employee under probation who has poor timekeeping, attendance or general performance. Without appropriate monitoring during probation the cause of any performance issue could go undetected; e.g. a family matter or an illness which covers an underlying disability.
The employer will find themselves on the back foot if they face an automatic unfair dismissal or discrimination claim and they have minimal evidence to show that the dismissal was for a potentially fair reason. Even if a claim may ultimately fail, it is not uncommon for it to progress past the initial sift at tribunal if an employer lacks evidence in their defence. This is especially true in discrimination cases where tribunals are reluctant to dismiss such claims without hearing evidence from the parties and the employer cannot immediately show a clear non-discriminatory explanation for the alleged treatment. There is likely to be scant evidence available if the employer did not actively manage the employee during probation. This will also be true if the employer can only point to dismissal stated as being for vague 'performance reasons'.
Therefore, the risk of providing vague reasons or no reason for dismissal is that it makes it much more likely that the employer will face the costs of defending or seeking to settle an automatically unfair or discrimination claim. Depending on the circumstances, there is the risk that the employer could lose such a claim.
Performance monitoring is always going to form a key part of any probationary period, whether or not that forms part of any clause in the employment contract. Best practice will always be for employers to ensure that there is some process put in place whereby good and bad performance can be discussed with the employee. This need not be onerous.
Employers should also not shy away from actively managing new employees for fear of uncovering any issues that add complexity, such as a protected characteristic. An employer will be better positioned to protect itself against subsequent claims by taking a proactive approach to identify issues and any legitimate concerns and to make it clear that the employer is not acting on the basis of any protected act or characteristic.
If you would like to discuss any aspect of this article further, please contact Michael Crowther or any other member of the Employment team on 0113 244 6100.
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The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.