By Gareth Matthews, Employment Law Solicitor, MLP Law

Probationary periods are not legal requirements and yet they are hugely important to businesses because they allow an employer to assess a new employee’s suitability for a particular job.

Previous research has found that one in five new employees fail their probationary period, with poor performance and poor attendance being the most common causes. With this in mind, we take a look at the benefits of probation periods and how employers can use them effectively.

Probationary periods: what exactly are they?
A probationary period typically comes at the start of a new recruit’s employment during which an employer has the contractual right to dismiss a new employee with very little notice, usually one week. After the probationary period has been successfully completed the notice period will then normally be extended. During this period, it is common for a new employee not to be entitled to certain contractual benefits such as sick pay or a pension.

Who are they for?
Probationary periods should be used for all new employees, with the exception of very short-term fixed contracts where their use would be unfeasible. It can also be a good idea to use probationary periods when promoting existing staff members in order to make sure they’re suitable for a more senior role.

Length of probationary periods
Generally speaking, probationary periods last for three or six months, depending on the company and the job role. However, in some cases they may be longer if the employer needs more time to assess an employee’s suitability for the role in question.

Make sure it’s crystal clear
Details of a probationary period should be set out in an employee’s contract, making it clear how it will work and how long it will last. The employee should be informed that the probationary period is used to test their suitability for the role and that their performance will be monitored throughout, after which it will be assessed to determine whether their contract of employment should be made permanent.

Employers would be well-advised to conduct weekly or monthly meetings with the employee to discuss how the probationary period is going and whether or not expectations are being met. They should also ensure that they make a formal assessment of the employee’s suitability for permanent employment before the end of the probationary period.

A probationary period can be extended as long as it has been stated in the employee’s contract. Typically, the period will be increased for a further three or six months. If an extension is agreed upon the employee must be told for how long and for what reason. In addition, any extension must be confirmed to the employee before the end of the original probationary period. This is to avoid the risk of the employee passing their probationary period by default.

Unless the absence is connected with a disability or maternity, poor attendance is likely to be a good justification for deciding that an employee has failed the probationary period. Keep in mind that it can be discriminatory to end an employee’s contract if the absence is caused by maternity or disability, particularly when the employee has not been given the opportunity to prove themselves during the initial assessment period. In these circumstances employers should attempt to extend the period of assessment in order to fairly and accurately decide on an employee’s suitability.

Failed probationary periods
New employees who have failed to pass their probationary period will usually not have accrued enough service to claim unfair dismissal. Therefore, the employer has flexibility with how to approach the subject. However, it is advised that they follow best practice by verbally explaining to the employee why they have failed their assessment and following up with a written document. Remember, the employee should be paid their contractual notice entitlement, which is usually one week.

Existing employees, who were subject to a probationary period following a promotion, may have the right to claim for unfair dismissal. In these circumstances, the employer should follow the ACAS Code of Practice on Disciplinary and Grievance Procedure. These employees would also need to be paid their statutory minimum notice entitlement, as determined by their length of service.

Protecting your business
Probationary periods are a good way of protecting your business. They can deal with performance concerns relating to a new recruit or even a newly promoted existing employee. A key factor to remember with probationary periods, however, is that companies need to ensure they are defined clearly and accurately in all contracts of employment.