Renewed focus on probation clauses in contracts of employment

An important piece of employment legislation came into force in December when the European Union (Transparent and Predictable Working Conditions) Regulations 2022 amended a number of existing elements of employment law.

“These amendments have brought a renewed focus on the importance of probation clauses in contracts of employment,” says Fiona Higgins, head of the Ibec Knowledge Centre, which provides tailored employment advice and information as well as online resources and tools for general HR support to members.

The new regulations limit the length of the probationary period to a maximum of six months for private-sector employees and 12 months for public-sector employees. An organisation’s right to extend probation is permitted only on an “exceptional basis” in the interests of the employee. “Employers should seek advice when considering extensions to probation periods,” Higgins advises.

The probation period should be seen as a valuable part of the selection and recruitment process, she adds. “The recruitment of new employees represents one of the most significant investments a company can make. Regardless of the sophistication of hiring techniques used during the recruitment and selection process, what employer can ever be 100 per cent certain of a person’s suitability until they have had the opportunity to assess their performance in the role? The selection process should not stop at the point at which a job offer is made, but rather continue until such time as the organisation and the employee has had a reasonable opportunity to assess their skills in action.”

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In that light, the probationary period should be seen as an opportunity to determine a person’s suitability for the role for which they were recruited and determine how to support their learning and development in that role.

“By the same token, a new hire should use this time to learn everything about their new work environment and what is expected of them, in order to affirm that they have made the right career transition,” says Higgins. “Therefore, this period should be used proactively by line managers and supported by HR.”

Unfortunately, this is not always the case. “Employers invest considerable time and money in the recruitment and selection process, but situations do arise where a candidate is not effectively managed during their probationary period until the end date looms and a decision needs to be made,” she notes. “There is no room for complacency at the commencement stages of employment. A structured induction and training programme is essential at the outset, with clear objectives set and expectations communicated for all new hires.”

There are a number of steps employers should take to maximise the value of probationary periods, says Higgins. “All new employees should be advised in advance that their employment is subject to the satisfactory completion of a probationary period. Employers should not make the mistake of assuming that employees are aware that they are on probation and understand the purpose of probationary period. Accordingly, a clause explaining the probationary period should be included in the contract of employment. The clause should clearly state the duration of the probationary term.”

Managers should also receive training to ensure they have the skills and capabilities to support new recruits in reaching the required performance standards within the agreed time frame, she adds.

“If there are problems, address them early and escalate, if necessary,” she advises. “Operate on the basis that there should be no surprises for the probationer. They should be clearly aware of where and how they have not met the expected standards throughout the process. Don’t leave it too late.

“Experience has shown that failure to provide appropriate induction, support and training for the individual to integrate into their new employment increases the propensity of them resigning during the early stages of employment.”

That is particularly important during a tight labour market. “A carefully planned and transparent approach at this stage is essential to the success of the appointment. It will go a considerable way to reducing the chances of the new recruit feeling poorly treated and the investment in their recruitment being wasted,” Higgins points out. “Equally, it reduces the risk of terminations becoming contentious if handled fairly and sensitively.”

Finally, it is worthy of note that a Court of Appeal decision last year confirmed that a probationary period is essentially a “trial period” for both employers and employees and that, except in cases concerning alleged misconduct, either party should be free to terminate the contract during that period by issuing notice.

However, each case should be taken on its merits. “Members should speak to their Ibec representative should they require advice regarding the management of an employee’s performance during the probationary period,” Higgins concludes.

knowledgecentre@ibec.ie