Probationary Periods – A Testing Time

PUBLISHED: 21st April 2023

Probation is not a legally defined term but generally is understood to mean a specific period usually at the beginning of the employment relationship which affords the employer (and the employee) an opportunity to assess the suitability of the employee for the role.

Are there any rules around probationary periods?

The European Union (Transparent and Predictable Working Conditions) Regulations 2022 (Regulations) which came into force on 16 December 2022 introduced new statutory requirements regarding probationary periods.

What do the Regulations provide on probationary periods?

• Statement of employment

Where a probationary period is to apply, the employer must set out its duration and any conditions attaching to it, in a statement of employment, to be provided to the employee within five days of the employee commencing employment.

• Limits on Probationary Periods

Where a probationary period is to apply in the private sector, the maximum probationary period shall not exceed six months.  The Regulations provide that the six-month probationary period may, on an exceptional basis, be longer where it would be in the interest of the employee.  It cannot, in any event, exceed 12 months.  In practice this means that when there is a longer probationary period, the employer should be able to show it is exceptional and not the norm.  There is currently no guidance on what is envisaged as “being in the interests of the employee”.  If the alternative to a longer probationary period would be the termination of the employment relationship, it is anticipated that a longer probationary period to allow for further time to improve, would be considered to be in the employee’s interests.

If an employee avails of certain categories of protected leave during the probationary period (e.g., maternity, adoptive, carer’s, paternity, parental, parent’s or sick leave), then the probationary period can be extended by the employer for the duration of the employee’s absence.

Notwithstanding the above, where an employee is employed on a fixed-term contract, the length of a probationary period shall be proportionate to the expected duration of the fixed-term contract and the nature of the work.  It is also stipulated that where a
fixed-term contract is renewed for the same tasks and functions, the renewed fixed-term contract should not contain a new probationary period.

The probationary period for a public servant shall not exceed 12 months.

Managing the Probationary Period

A probationary period is a very useful mechanism to enable both employers and employees to trial the working relationship and ensure that the parties are a good fit and work well together.  Employers should make effective use of the probationary period and ensure that performance and suitability are assessed from the outset.

Where underperformance is identified, this should be addressed early to enable the employee to reach the required standard.  A decision to terminate employment during the probationary period is not something which should come as a shock to an employee.

Termination During Probation

A well drafted contract will normally provide for a short notice period during the probationary period (e.g. one week) and provide for the option of payment in lieu of notice. Employees will not usually have the benefit of the Unfair Dismissals Acts until they have accrued 12 months’ continuous service, so the termination of an employee during the probationary period, and in accordance with the terms of the contract, can be an efficient and lower risk way to terminate an underperforming employee.

The Court of Appeal decision in Donal O’Donovan v Over-C Technology Limited and Over-C Limited [2021] IECA 37 provided helpful clarity to employers on termination during probation.  In that case Mr O’Donovan had been terminated during the probationary period due to his underperformance. He argued that he had an implied right to fair procedures in assessing his performance during the probationary period and that he had therefore been unlawfully terminated.  The Court of Appeal did not accept this argument and stated that to do so would negate the whole purpose of a probationary period.

The Court stated:

 “During a period of probation, both parties are - and must be - free to terminate the contract of employment for no reason, or simply because one party forms the view that the intended employment is, for whatever reason, not something with which they wish to continue. Neither party can hold the other to the continuation of the employment against the wishes of the other. I do not accept that a court can imply a right to fair procedures – still less uphold a cause of action for the breach of such an alleged right – in relation to the assessment of an employee’s performance by an employer (other than for misconduct, which does not arise here,) during the probationary period, as this would negate the whole purpose of a probationary period”

In other words, where there is underperformance during the probationary period, an employer can terminate an employee by the giving of notice in accordance with the contract.

It is important to note there were specific clauses in Mr Donovan’s contract providing for termination during the probationary period where his performance was not up to the required standard and providing for payment in lieu of notice.  It is also critical to remember that dismissal on the grounds of misconduct (e.g., an allegation of theft or wrongdoing) will trigger a right to fair procedures and should be treated entirely differently.  It is often the case that underperformance can be made up of a myriad of factors including some which may stray into the territory of misconduct. 

The recent High Court case of Anna Buttimer v Oak Fuel Supermarket t/a Costcutter Rathcormac [2023] IEHC 126 is illustrative of this point.

In that case, the plaintiff commenced employment with the defendant on 7 March 2022. She was hired as a supervisor on a promise that, subject to performance, she would be promoted to the role of store manager in one month.  She carried out the duties of store manager and was presented internally as store manager.

Within a few weeks of being hired, difficulties arose with the plaintiff’s interactions with fellow staff members which resulted in an allegation of bullying being made against the plaintiff. An external investigator was appointed to conduct an investigation in early April. Whilst the investigation was ongoing, further allegations were made against the plaintiff. Her employment was terminated on 17 May 2022.

The plaintiff argued that her dismissal during the probationary period was related to misconduct and that she therefore had a right to natural justice and fair procedures. The defendant argued that the plaintiff had failed her probation period due to poor performance and that she was “not the right fit” for the shop.

The plaintiff sought interlocutory relief to, amongst other things, restrain her termination, continue payment of her salary, and to prevent anyone being hired into her role. In determining whether the relief should be granted, the court considered whether a strong case had been established and if the dismissal was related to allegations of misconduct.

In his decision, Mr Justice Dignam succinctly outlined the position in relation to termination during the probationary period as follows:

“The authorities are clear that an employee may be let go during her probationary period for any reason (including poor performance) or no reason without any obligation to afford fair procedures. However, it is equally clear as a matter of general principle that while at common law an employer is free to dismiss an employee for any reason or no reason, where the dismissal or termination is for misconduct, the employer is obliged to comply with fair procedures.”

Mr Justice Dignam found however that in this case, whilst the defendant “had concerns about the plaintiff’s performance and had spoken to her about them, they did not consider those concerns sufficient to fail her probation and only reached that view within a very short few days of having received another set of allegations. This coincidence of events cannot be ignored and in fact is not even explained by the defendant. It may, of course be fully explained at trial but for present purposes it supports the plaintiff’s account.”

He went on to state that he had “no hesitation in concluding that the type of behaviour which is alleged against the plaintiff amounts to misconduct and would be understood as such by reasonable persons. The mere fact that it might also be considered as a performance issue does not preclude it from being misconduct. The defendant appears to take the position that if it is “performance” then it cannot be “misconduct”. I do not accept that.”

The court ultimately concluded that the plaintiff had made out a strong case that her dismissal was conduct related and ordered that the defendant not hire anyone else into the role pending the hearing of the action.

This case is a timely reminder that an employer should be mindful of all of the circumstances which may inform the decision to terminate. Notwithstanding that an employee’s performance may be below standard, where allegations of misconduct are at issue, employers should proceed with care and ensure adequate procedures are followed, even during the probationary period.

Recourse for Termination During Probation 

As outlined above, the probationary period does not give an employer carte blanche to terminate an employee arbitrarily during the probationary period and consideration must be given to the terms of the contract, the reason for the termination and the employee’s statutory protections.

Employees will not usually have the benefit of the Unfair Dismissals Acts until they have accrued 12 months’ continuous service; however, it is important to remember that an employee will have statutory protections from dismissal pursuant to the Equality Acts (for discriminatory dismissal) and the Protected Disclosures Act (where the employee was terminated as a result of having made a protected disclosure).  Therefore, careful consideration should be given to the factual matrix to understand if these rights have been triggered before terminating.

It should also be noted that an employee with less than 12 months’ service can also bring proceedings for unfair dismissal pursuant to Section 20(1) of the Industrial Relations Acts.   While the outcome of such proceedings is not legally binding on the parties, these claims can result in negative publicity for the parties.

Key Takeaways

The changes introduced by the new Regulations will have a significant impact on how employers address probationary periods in their contracts of employment and in practice.  We would advise employers to review their contracts and probationary practices in light of the Regulations.

Probationary periods are a practical means of establishing a successful and effective employment relationship, but they should be managed carefully. An employer should not assume that any termination within the probationary period is without risk. Careful consideration should be given to the particular facts of each case before determining the process which needs to be followed.  

Elizabeth Mara, Senior Associate, LK Shields Solicitors LLP