Probationary periods: top tips for effective management

As highlighted in our recent blog on the King's Speech, one of the commitments made by the Labour Government that is likely to have a substantial impact on employers is unfair dismissal protection being made a day one right for all workers. This represents a considerable departure from current employment practice where unfair dismissal protection is afforded to employees (not workers) and only those employees who have a minimum of two years’ service. (NB: Currently, employees with less than two years’ service still have the right to bring claims for breach of contract, discrimination, whistleblowing and in some cases automatically unfair dismissal).

As part of the Government’s commitment to provide unfair dismissal rights from day one for all workers, in its “Plan to Make Work Pay” it states that:

“This will not prevent fair dismissal, which includes dismissal for reasons of capability, conduct or redundancy, or probationary periods with fair and transparent rules and processes. We will ensure employers can operate probationary periods to assess new hires. However, the changes will help to ensure that newly hired workers are not fired without reason or cause and will help drive up standards in workplaces.”

Given the proposed changes, it would be sensible for employers to think about how probationary periods could be better utilised in preparation for unfair dismissal protection becoming a day one right (particularly if the right applies to both employees and workers).

Although we are yet to see the Employment Rights Bill, which will include the detail around how the day one unfair dismissal right is intended to work in practice, armed with the wording in the “Plan to Make Work Pay”, here are some points employers should start thinking about ahead of the change:

• Consider implementing probationary periods for all roles where possible (even short-term contracts).
• Ensure that probationary periods have fair and transparent rules and processes. Consider implementing the following:  
  
  
  • In contracts/probationary period policies, include details about what is expected of individuals during the probationary period and how the process will work.
  • As part of the induction process, go through the specifics of the probationary period and process so the individual is clear on what to expect.
  • Include a term in the contract that allows the employer to extend the probationary period where the individual has taken any form of leave during the probationary period or where the employer has been unable to assess the individual during the probationary period for other unexpected reasons.
  • Include a term in the contract that allows the employer to dismiss the individual before the end of the probationary period on a certain period of notice (one week’s notice is common).
  • Diarise dates for meeting with the individual on a regular basis to discuss their performance during the probationary period (keeping clear notes of each meeting and sticking to the dates).
  • Diarise the end of the probationary period date and ensure the employer confirms to the individual in writing before the end date whether or not the probationary period has been passed (and whether there is an extension to the probationary period with an explanation of why).
• Follow a fair process when dealing with dismissal due to an unsuccessful probationary period: under the current rules, employers often elect to shorten or indeed by-pass a fair procedure where employees have less than two years’ service (given the limited risks of unfair dismissal claims in such cases). Under the proposed new rules, employers will have to rethink this approach if unfair dismissal protection becomes a day one right. The current ACAS code of practice on disciplinary and grievance procedures does not refer to probationary periods, so unless the Code is revised then the current ACAS procedure would apply in full to all employees from day one. Most organisations choose to apply their internal procedures to employees only, but if workers are afforded the right to unfair dismissal protection it would be prudent to update policies to include workers as applicable.
• Consider job descriptions carefully as these will be key to employers being able to successfully point to areas of underperformance as compared to the requirements in the job description.
• Labour’s “Plan to Make Work Pay” sets out that the Government will ensure that employers can operate probationary periods “to assess new hires”. Assessment of the new hire will undoubtedly include assessment of their performance and conduct, but it is not yet clear how much further employers will be able to go. For example, could an employer assess that a new hire is simply not the appropriate person for the job?
• Ensure a clear paper trail is kept of each step of the probationary period assessment: in the event of an unfair dismissal claim, it is very helpful if documentation can be provided which shows that a fair and reasonable assessment was behind the decision to dismiss, and that the individual was given (ideally on several occasions during the probationary period) clear feedback and the chance to improve. Evidence that support and/or training was offered/provided would also be helpful.
• Consider whether the use of probationary periods could be extended to cover those who are promoted to a new role in the business.
• Consider undertaking a review of the performance appraisal process currently in place to see how it can be adapted to those in a probationary period.
• Provide training for managers to ensure they comfortable handling performance management processes and are aware of the importance of starting them promptly in order to make effective use of probationary periods.
  
  

These points are a useful starting point for employers who want to get ahead of the proposed changes, but we will have to wait for the detail in the legislation before we know how the Government intends the use of probationary periods to operate in practice. It is a case of watch this space for now, and we will provide a further update as and when the draft legislation is published.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, August 2024