Using probationary periods to manage performance
21 March 2025
Unfortunately, following a robust and thorough recruitment process is no guarantee that an employee will be up to the job.
The effective use of a probationary period is one way to manage the risks arising in this situation, and this is expected to become increasingly important when the Employment Rights Bill 2024 passes into law. The Bill’s provisions will allow employees to bring a claim for unfair dismissal from their first day of employment, removing the current requirement of two years’ service. The Government’s stated intention is to bring this change into law in the autumn of 2026. It is expected that employers will still be able to dismiss fairly during a limited initial period (nine months is the Government’s preference), provided they follow a ‘light-touch’ procedure, although no details of this have yet been confirmed. However, it is clear that to avoid liability for unfair dismissal, even if there is no need to go through a lengthy capability procedure, it will be crucial to use any probationary period to monitor, assess and respond to the employee’s performance.
How an employee performs at interview does not always reflect their capabilities; their performance may also deteriorate over time. This means managers need to be confident enough to manage performance, especially where it is unlikely that support or training will bring the employee up to the required standard.
Although the changes to qualifying service for unfair dismissal are probably around 18 months away, now is a good time for businesses to prepare for these significant changes by embedding the effective management of probationary periods.
In this article, we look at how to use probationary periods effectively, the legal risks arising from dismissing poor performers, and provisions relating to probation which should be included in employment contracts.
Dismissal during the first two years: pitfalls to avoid
After two years, it may be fair to dismiss a poorly performing employee on the grounds of capability, but a fair procedure has to be followed and the decision must be reasonable. The process can be particularly challenging for line managers, since it is time consuming and involves close monitoring and supervision.
Employers sometimes believe that there are no risks to dismissing a poorly performing employee before they reach two years’ service; for a number of reasons, however, this is not the case:
Employees do not need two years’ service if they can show that their dismissal was related to a protected characteristic, such as their gender or race.
Employees do not need two years’ service if they can show that their dismissal was related to a protected reason, such as making a request for flexible working, whistleblowing, or pregnancy.
Even if the employee is dismissed before they reach the two-year milestone, their dismissal may be deemed to fall after it. For example, dismissing an employee with less than the statutory minimum of notice, solely with the purpose of exiting them in advance of two years’ service, will not prevent them from bringing a claim. For the purposes of working out length of service in order to determine whether the employee can bring a claim, the statutory minimum of notice will be added to the date notice is given.
Reputational damage can occur if employees are dismissed after having settled into a team and gained a false sense of security.
Inconsistent treatment of staff, not following a basic procedure, or not explaining the reason for dismissal to the employee will usually make it more difficult to successfully defend unfair dismissal claims.
Using probationary periods effectively
Effective use of the probationary period can bring employment to an end at an early stage in the relationship, either during or at the end of probation. This avoids following a lengthy procedure at a much later date when the employee has accrued unfair dismissal rights. Even if the employee has not reached two years’ service, however, dismissing them after they have passed probation will add costs to the business (often, for example, in paying a longer notice period) and may damage morale, for example, where other team members query the retention of an employee whose performance is clearly inadequate. Not dismissing in a timely manner also increases the risk that the dismissal can be argued to have arisen from another matter. At worst, this could be a protected reason, such as if the employee raised health and safety concerns, which could give rise to a tribunal claim (regardless of whether two years’ service has been reached).
Best practice includes the following:
Include appropriate provisions for a probationary period in the employment contract (see below).
Bring the probationary period to the employee’s attention in the welcome letter or induction.
Take a proactive approach to assessing performance rather than waiting for issues to come to light.
After allowing a little time for the new recruit to settle into the role, ensure that they are given appropriately challenging work, so that their capabilities can be assessed early on.
Clearly set out objectives and expectations, and how performance will be assessed.
Put in place appropriate training, support, resources, monitoring and supervision.
Promptly give feedback on any concerns as they arise.
Schedule a review meeting midway through and at the end of the probationary period to discuss performance and suitability for the role.
Where there are concerns about the employee’s suitability at the end of the probationary period, consider extending the probationary period if the contract of employment allows this.
If the employee has passed their probationary period, write to them to confirm this.
Contractual provisions
Contracts of employment should include a probationary period and specify how long it will last; six months is typical. We can provide wording that will give you the flexibility to extend the probationary period in certain circumstances.
Contracts should usually specify a shorter notice entitlement during the probationary period, to allow either the employer or the employee to initiate a quick departure.
How we can help
We can help you implement a range of measures that will minimise risk to your business in managing performance. These include drafting effective policies and probationary clauses in contracts, advice on ongoing performance management, and negotiating and drafting settlement agreements to secure quicker and lower-risk exits.
For further information, please contact the team at Synchrony Law.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.