As published on Legal Island, 22 February 2021.
In the first of a new series of articles on Legal Island, head of employment, Patrick Walshe, addresses key questions often asked about probationary periods. This article includes a checklist to help employers review probationary clauses in employment contracts.
What is probation?
Probation is a period of time at the beginning of the employment relationship during which the employer assesses whether the employee is suitable for permanent employment.
It’s common to refer to this as the new employee’s “probationary period”.
How long do probationary periods typically last?
There are no mandatory probationary period limits as such (although a probationary period should never be longer than one year, and in practice it’s wise to cap at 11 months – for more on this, see below).
In practice, 3-6 months is the norm.
Am I obliged to impose a probationary period in the first place?
No – although your ability to terminate the employee safely during the initial period of employment will be reduced if you don’t have one. An employment contract that doesn’t contain a probationary period clause is very much the exception to the rule.
Can probationary periods be extended?
Yes – subject to the one–year rule referred to above. A prudent employer will include provision in the employment contract that allows them to extend at their discretion.
It’s fairly typical in Ireland to allow for a further 3-month extension from an initial 6-month period (but, as referred to, these periods are not mandatory).
Is a one–year probationary period wise?
Not at all. There are three points to note here:-
- First of all, it may be more difficult to attract staff if they are subject to such a long probation period.
- While unfair dismissals legislation allows employers to use probationary periods, it caps them at 52 weeks.
- Separately, and most importantly, notice periods counts as part of service. If somebody has a one–month notice period and I dismiss them at the end of month 12 of service, it will be too late – they will have the required 52 weeks of continuous service (obviously because 12 + 1 = 13).
A prudent employer should ensure that they do not inadvertently pass the 52–week threshold because total service to date + notice period = more than one year.
Can an employee bring a claim if they are dismissed during probation?
a) Generally, an employee cannot bring an unfair dismissal claim unless they have 52 weeks of continuous service.
This is subject to certain limited exceptions (there is no service threshold for dismissal relating to pregnancy, trade union membership and certain other grounds, for example).
b) In addition, there is no service threshold to bring a discriminatory dismissal claim. This is where the employee claims they are dismissed because of their race, sex, sexuality, age or any of the other discrimination grounds.
c) An employee can in theory bring a wrongful dismissal claim during the first year – but such claims are quite rare (and may become rarer because of a recent court decision – discussed below).
d) Lastly, an employee dismissed during probation can seek a non-binding Recommendation from the Workplace Relations Commission under the Industrial Relations Act, 1969.
What does all that mean in practice?
It means that:-
a) You don’t need to worry about an unfair dismissal claim (where an employee can be awarded up to two years’ remuneration) unless you dismiss the employee for being pregnant, being a trade union member or in certain other limited circumstances.
b) You don’t need to worry about an equality claim (where an employee can also be awarded up to two years’ remuneration) unless you dismiss the employee because of their race, sex, sexuality, age or for any of the other grounds prohibited in legislation.
c) You’re theoretically at risk of a wrongful dismissal claim if you dismiss during probation. Wrongful dismissal means dismissal in breach of contract – and can only be litigated in the courts (the WRC has no jurisdiction here). In the probation space, an employee typically brings a wrongful dismissal claim if they can establish that (i) they were entitled to fair procedures prior to dismissal but (ii) the employer did not afford them those fair procedures.
Wrongful dismissal claims are rare – which means that the odds greatly favour employers. They tend to be confined to high-level executive roles.
d) Lastly, under the 1969 Act an employee can ask the WRC/Labour Court to examine their case and determine whether they were fairly dismissed or not. The approach of the WRC/Labour Court tends to focus on fair procedures – did the employee have the right to fair procedures before they were dismissed? Typically, the WRC/Labour court find that they do – but unless the employer agrees to be bound by the decision, these rulings are always non-binding. In certain sectors (the public sector, for example) there may be a tendency to observe WRC/Labour Court rulings, but this is not obligatory.
Does the emphasis on fair procedures mean that I should follow some sort of process during probation to give the employee a chance to improve performance?
A very recent decision of the Court of Appeal is highly relevant here. That decision confirms that fair procedures do not need to be automatically followed where an employee is being dismissed for performance reasons (although it is essential that the employer draft the employment contract clearly on this point – dealt with in more detail below).
As referred to above, the WRC/Labour Court have usually ruled that fair procedures should be followed – but that position may now change given the intervention of the Court of Appeal.
What about dismissals for misconduct during probation (as opposed to dismissal for performance)?
There is much more of an argument for following a process here. The recent Court of Appeal judgement referred to above suggests that it’s still appropriate to follow a process if you dismiss an employee for misconduct during probation.
The WRC/Labour Court would likely rule in the same way.
Should I have a shorter notice period during a probationary period?
Yes. It’s legitimate to impose a shorter notice period – one week is probably the norm.
In addition, a good employment contract will include a clause allowing the employer to Pay In Lieu of Notice (“PILON”) which means that a problem probationary employee can be removed quite quickly and painlessly if needs be.
What should be in a probationary period clause?
Probationary period clauses should at a minimum include the following:–
a) Stipulate the length of the probationary period – as referred to, 3-6 months is common.
b) Allow the employer to extend at its discretion – if you are in the 3-6 month space initially, you can consider a 3-month extension.
c) Allow for a shorter notice period – it’s fairly common to provide for a 1-week notice period during probation (and you should ensure that you can terminate on this notice during the initial period and any extension).
d) Stipulate that the employee can be terminated for any reason or for no reason during probation.
e) Stipulate that the disciplinary procedure will not apply to a dismissal during probation.
The last two points are particularly important – and an employer should ensure that the clause deals with them.
Checklist for employers
- Are the probationary period clauses in my standard employment contract fit for purpose?
- Do they allow for extensions?
- Do they exclude application of our disciplinary procedure?
- Do they deal with the other important points at (a) to (e) above?
- Am I monitoring where employees are in their probation periods – ensuring that I can still dismiss safely if I need to?
- Is there a PILON clause in the contract – meaning I can remove the employee from the workplace quickly if I need to?
- Have I allowed for a shorter notice period during probation?
- When dismissing, am I clear in my own mind that I am doing so for performance reasons (ie, the employee’s performance is not up to scratch)?
- When dismissing for misconduct, as opposed to performance, have I observed a process to ensure fair procedures have been followed?
For further information in relation to the above article, please contact Patrick Walshe.