Many employers run into issues with contracts of employment when it comes to managing probationary periods, and are unsure of what elements of a contract change after probation, and how to manage the transition from a contractual point of view.
Whilst employers are required to give details of any probationary period in their employment contracts, probationary periods themselves have no legal status at all – they are not compulsory or universal. Employees who are serving a probationary period have the same statutory rights as any other employee. Statutory employment rights either apply from day one, or are dependent on length of service – probation status makes no difference.
This means dismissing someone within their probationary period is no easier than once they’ve passed it, although often a longer notice period will apply.
Other than things like holiday entitlement and pension, contractual benefits are purely between the employer and employee, therefore many employers choose to withhold certain contractual benefits until probation has been passed. As long as this is clear in the contract of employment, that is perfectly fine to do.
There is often an administrative burden involved in contractual benefits, and some are not things you can easily cancel, such as gym membership or private healthcare, so some employers prefer to wait until there’s more certainty before offering these.
Pension is slightly different in that employees are entitled to be auto-enrolled into a pension scheme, and probation can’t be relevant. What you can do is postpone auto-enrolment for up to three months, which obviously coincides at least partially with a probationary period.
It’s really common for contractual notice periods to increase once probation has been passed, so that employers (and, in fact, employees) can terminate the contract with relative ease and at low expense if it becomes clear things aren’t working out.
Obviously ideally you’ll be sure enough by the time probation is approaching its end whether the employee is a good fit. But sometimes for whatever reason, a longer period is needed. Perhaps there has been illness or other absence during the period, a disruption to training or other support, or performance concerns that are being addressed but not enough time has been given yet to assess whether improvement is sufficient.
If you don’t have provision to extend in the employee’s contract, doing so may be a breach of contract, so it’s important to include that. Extensions should not be for too long, and extending multiple times is not advisable or particularly fair on either party.
Make sure you confirm the extension in writing, as the probationary period (and relevant terms and conditions) is part of the contract, and is something you’re varying through the extension.
End of probation issues
A common contractual issue with probationary periods is actually lack of clarity about whether the period has ended or not. It’s really common for busy managers to let things ‘drift’ and suddenly the end date for probation has been and gone before a review has been conducted or anything done about extension, if that is what is required. In many cases, the simple fact of the time passing will mean the probationary period has been passed by default. It’s not possible to extend probation once it has been passed, and, whilst this doesn’t represent a problem in terms of dismissal, as statutory rights aren’t increased, obviously any other terms that change on passing probation will now be in effect, with a longer notice period being particularly relevant.
You can address this to some extent through wording the contract so as to make clear that probation is not deemed to have been passed until specifically confirmed as such, but clearly a much better solution is to make absolutely sure that reviews are conducted in plenty of time, so that the situation doesn’t occur.
If you need any further advice on issues to be aware of surrounding probationary periods, do get in touch.