The effective use of a probationary period is one way to reduce the risks, and this is expected to become increasingly important when the Employment Rights Bill 2024 comes into effect. The proposed changes will allow employees to bring a claim for unfair dismissal from their first day of employment, rather than needing two years’ service. It is expected that employers will still be able to dismiss fairly during a limited initial period (nine months is the Government’s preference), provided they use a ‘light-touch’ process. To avoid unfair dismissal claims or having to go through lengthy capability procedures, it will be crucial to use probationary periods to monitor, assess and respond to the employee’s performance.
‘How an employee performs in an interview does not always reflect their capabilities, or their performance may deteriorate over time,’ says Jonathan Lewis, Solicitor in the employment team with QualitySolicitors Parkinson Wright. ‘This means managers need to be confident and ready to manage performance, especially where it is unlikely that support or training will bring the employee up to the required standard.’
Although the changes proposed in the Employment Rights Bill are not expected until 2026 at the earliest, now is a good time to embed the effective management of probationary periods so that your business is ready for these significant changes.
Jonathan highlights the legal risks of dismissing poor performers and the timing of this, explains how to use probationary periods effectively, and identifies what an employment contract should include about a probationary period.
Dismissal during the first two years - pitfalls to avoid
After two years, it may be fair to dismiss a poorly performing employee on the grounds of capability, however a fair process has to be followed and the decision must be reasonable. This process can be particularly challenging for line managers as it is time consuming and involves close monitoring and supervision.
Employers sometimes believe that there are no risks to dismissing a poorly performing employee before they have two years’ service, but this is not the case because:
- dismissing someone without notice, or less than the statutory minimum notice entitlement, just before they reach the second anniversary with the business in order to prevent them having two years’ service does not work. For purposes of working out their length of service for bringing a claim, the statutory minimum notice period will be added to the date notice is given;
- employees can bring a claim for unfair dismissal from the first day of employment if they can show that it was related to a protected characteristic, such as their gender or race;
- employees do not need two years’ service if they can show that the dismissal relates to a protected reason, such as making a request for flexible working, for whistleblowing, or because of pregnancy; and
- reputational damage can occur if employees are dismissed after having settled into the team and having gained a false sense of security.
Inconsistent treatment of staff, not following a basic process, or not explaining the reason for dismissal to the employee, will usually make it more difficult to successfully defend such claims.
Using probationary periods effectively
Effective use of the probationary period can bring employment to an end at an early stage in the relationship, either during or at the end of the probationary period. This avoids following a lengthy process when the employee is protected from dismissal, currently after two years’ employment. It also avoids dismissing an employee after a year or so when some individuals might query why they have been kept on if their performance was inadequate. This can trigger concerns that the dismissal is actually due to a protected reason, such as if they raised health and safety concerns, which could give rise to a tribunal claim without needing two years’ service.
Best practice includes:
- highlight to the employee, in the welcome letter or induction, that the start of their employment involves a probationary period;
- take a proactive approach to assessing performance rather than waiting for issues to come to light;
- after allowing the new recruit time to settle into the role, ensure that they are given appropriately challenging work, so that their capabilities can be assessed early on in their employment;
- clearly set out objectives and expectations, and how performance will be assessed;
- put in place appropriate training, support, resources, monitoring and supervision;
- promptly give feedback on any concerns as they come up;
- hold a review meeting midway and at the end of the probationary period to discuss performance and suitability for the role;
- where there are still concerns about the employee’s suitability at the end of the probationary period, consider extending the probationary period if the contract of employment allows this; and
- if the employee has passed their probationary period, write to them to confirm this.
Contracts of employment and probationary periods
Contracts of employment should include a probationary period and specify how long it will last; typically between 3 and 6 months. We can suggest additional wording that will give you flexibility to extend the probationary period in certain circumstances.
Contracts should usually specify a shorter notice period entitlement during the probationary period, to allow for a quick departure once either the employee or the employer decides the job or the relationship is not working out.
How we can help
We can help you implement a suite of measures that will minimise risk to your business in managing performance. This includes drafting effective probationary policies and probationary period clauses in contracts, advice on performance management and negotiating and drafting settlement agreements to secure a quicker and lower-risk exit.
For further information, please contact Jonathan Lewis or a member of the employment team on 01905 721600 or via email worcester@parkinsonwright.co.uk
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.