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Employers use probationary periods to coach and evaluate new employees, employees placed in a new position, and employees with performance problems. A probationary period can be a useful management tool, but it can also cause legal trouble. Below, we explain how and when to use probationary periods in a way that won’t land your company in court.
A probationary period can be a useful coaching tool: It gives an employee some extra time and supervision while learning a new job, and it gives a struggling employee more detailed guidance and a sense of urgency about improvement. However, it can also lead to legal trouble if it compromises at-will employment.
If your company decides to use a probationary period, it should take steps to make sure that employees know they can still be fired at any time. All employment documents that reference the probationary period, including the employee handbook, performance appraisals, performance improvement plans, hiring paperwork, and so on, should clearly state that the probationary period does not change the at-will employment relationship. These documents should clearly state that an employee may still be fired for any reason at any time, during the probationary period or after completing it.
Probationary periods have no special legal status and employees who are on probation enjoy the same statutory employment rights as other staff. They are also entitled to the national minimum wage, statutory sick pay, rights under the working time rules and time off work in certain circumstances. Although a probation period does not affect an employee’s statutory rights, you may choose to limit their contractual rights in certain areas. This allows the employer to withhold some or all benefits available to employees who have successfully passed their probationary period. However, employees will still have rights to:
Many contractual probationary periods will specify that an employee is employed ‘subject to the satisfactory completion of the probationary period’ and, if the employee has not ‘passed’ their probation a dismissal can be carried out. If an employee does not successfully pass their probation period, they are still entitled to receive the correct statutory notice of termination (wrongful termination), or contractual notice if that is higher, or payment in lieu of notice if there is a contractual clause which allows it.