Navigating Probationary Periods in the wake of the New Labour Employment Agenda

It has been widely reported that the new Government intends to introduce a new Employment Rights Bill in its first 100 days of office.

Whilst we await the detail of that Bill, what we do know is that there is a desire to bring in a “Day One” right for employees to claim Unfair Dismissal at an employment tribunal in circumstances where they are dismissed.

Employers are therefore advised to revisit their employment and recruitment practices – including probationary periods – in preparation for what could be the biggest change in employment rights for many years.

Why are Probationary Periods Important?

A probationary period is a set timeframe at the beginning of an employment contract during which an employee’s performance, conduct, and overall suitability for a role can be assessed. Typically lasting between three and six months, this period allows both parties to determine if the employment relationship is a “good fit”.

It is important to note that even at present, dismissing during or at the end of a probationary period is not risk-free, and claims could still be brought of discrimination or “automatically unfair” dismissal.

Features and benefits of a Probationary Period?

During a probationary period, an employee often has the same responsibilities and duties as any other employee, but common points of difference may be:

• Both parties can terminate the contract early on a minimal period of notice
• Access to staff benefits i.e., company share scheme, vouchers for childcare etc. may be limited
• Access to contractual sick pay may be limited during any probationary period
• Access to private medical insurance is unlikely to apply to new employees during probation
• The company’s disciplinary and performance management processes may be disapplied

Legal Status of Implementing or Insisting on a Probationary Period

The UK has no statutory scheme setting out requirements for a probationary period. Rather, this would simply be a matter for agreement between the parties, and would be set out in the contract.

Employers do have a legal obligation, if insisting upon a probationary period, to set out in the section 1 statement of terms mandated by the Employment Rights Act 1996, details of “any probationary period, including any conditions and its duration”.

The right to be provided with a statement of terms of employment is already a Day One right for all workers, and employers should give particular attention, moving forward, to what detail ought to be included should a probationary clause be envisaged.

The Employment Rights Act 1996 further sets out the definition of what is meant by “probationary period” –  a temporary period specified in the contract between a worker and an employer that –

• Commences at the beginning of the employment, and
• Is intended to enable the employer to assess the worker’s suitability for the employment

The current penalty for failing to properly set out a probationary period, or any other detail in a s.1 statement is a claim of compensation which can range from 2 to 4 week’s pay. The sum is set by statute, and any such claim can only be pursued alongside another claim.

It remains to be seen whether this regime will be changed, and the penalties will be reviewed in light of what is expected to be the biggest change in employment rights in a generation.

Given the current definition of probation, it seems unlikely that employers could use a probationary term for unreasonable periods of time (beyond what is needed to assess suitability).  The use of probationary periods may however become more commonplace, further regulated and include different degrees of specificity.

Labour’s agenda for Probationary Periods

The new Government has sought to reassure employers that fair dismissals will remain possible for reasons of “capability, conduct or redundancy”, or “probationary periods with fair and transparent rules and processes” whilst also promising “basic individual rights from day one for all workers”.

Are these noble aims compatible? How might this play out in an employment context?

One way might be to introduce the day one right to claim unfair dismissal whilst also confirming that anyone dismissed during a reasonable probationary period would be unable to claim unfair dismissal; perhaps with requirements in terms of process to be followed and/or information to be given to new employees about their rights as a probationer. This would be in keeping with the commitment to supporting probationary periods with fair and transparent rules.

Decoding how things might develop

Whatever the new Government decides to do, there are several questions that remain unanswered about the detail of the proposal to introduce Day One basic employment rights and how these might interact with the effective use of probationary periods:

• Will employers be able to decide the length of any probationary period – or might there be a statutory cap introduced and the ERA amended?
• Will a reasonable extension of the probationary period be allowed?
• What impact will a dismissal during a probationary period have and what claims can be brought?

If you would like to discuss organisational change in your workplace, or how to implement variations to your standard terms and conditions to include robust probationary periods then please contact a member of our Specialist Employment Law Team.

This update contains general information only and should not be construed as providing legal or other professional advice.