Changes to the Employment Act 2000 – Part 5

Probation periods – the current law

Currently, section 19 of the Act provides simply that:

“(1)    A new employee may be required to serve a probationary period.

 (2)     During the probationary period, the employer or employee may terminate the contract of employment for any reason and without notice.”

This provides an employer with a great deal of flexibility; it can require a new employee to serve a probation period of an indeterminate length (albeit a court or tribunal may be willing to imply a contractual term that the period of probation shall be no longer than is reasonable), during which time it can terminate the employment with immediate effect, should it choose to. An employee on probation can also be dismissed for any reason, albeit that terminating an employee on the grounds of a ‘protected characteristic’ as defined in the Human Rights Act 1981 (such as sex, race and disability) would likely still amount to unlawful discrimination.

Details of any probationary period must also be included in the Statement of Employment which is required to be provided to all employees.

The employee’s contract will often provide further detail regarding the use of the probation period, including its duration, possibly with an ability for the employer to extend probation for an additional period at its discretion.

In general, though, the current statutory regulation of probation periods offers substantial advantages for employers and minimal protection for employees.

The new law

The legal landscape post-1 June 2021 will be quite different. Section 19 will be replaced with a much more prescriptive set of provisions, pursuant to which:

• A new or promoted employee may be required to serve a probationary period of not more than six months, commencing on the date of their employment or promotion;
• An employee is entitled to receive from their employer a review of their performance, on or before the completion of the first half of their probationary period;
• An employer may, before the expiration of the initial probationary period, and only after conducting the performance review mentioned in the preceding point, extend the probation period for a maximum of three months;
• During the probationary period (including any extension), the employment may only be terminated without notice by the employer for a reason relating to the employee’s performance review, performance, conduct, or the operational requirements of the business (although this does not apply to employees serving a period of probation after a promotion).

The six month and three month periods referred to above do not apply to customs officers, fire officers, police officers, prison officers and any other classes of employee as may be prescribed in future.

Comment

Employers will likely need to take a number of steps to deal with the upcoming changes to the law.

For future recruits, existing template offer letters, employment contracts and statements of employment should be updated to be consistent with the new regime. In relation to existing employees, the changes to the law appear to apply equally to anyone who is already within a probationary period as of 1 June. For any employees in this position, the employer should be aware that section 19 will override anything to the contrary in the employee’s existing employment contract or statement of employment. Nonetheless, as a matter of good housekeeping, it would be prudent to notify the employee of the changes.

Employers will also need to ensure they schedule performance reviews before the first half of the probation period has come to an end. While it is probably not necessary to refer to the right to such a review in individual employment contracts, employers may want to make reference to them in their performance management policies. It would also be prudent for the employer to ensure a written record of the performance is kept.

In future, employers will also need to be mindful of the limited grounds on which they may legally dismiss an employee without notice during probation. In most cases, however, employees fail probation due to issues with their performance or conduct and so, in practice, it should not be difficult for the employer to identify a lawful reason for termination.

Summary

The new legal regime discussed in this article will result in a significant change to many employers’ current practices and will substantially increase legal protections for employees, and risks for employers, in the context of probation periods.

Anyone with any questions concerning how these amendments may impact their business can contact a member of our Employment and Immigration Practice.