knowledge | 17 June 2019 |
Effectively Managing Employees’ Probationary Periods
Probationary periods are frequently provided for in contracts of employment to allow for a trial period in which an employer can evaluate an employee’s suitability and performance. However, employers may be surprised to discover that probationary periods are not without their pitfalls and dismissal during this trial period can carry a number of legal risks. Employers’ contractual freedom to implement probationary periods will also soon be subject to potentially significant restrictions pursuant to a recently adopted Directive.
Even where an employer provides that the standard disciplinary procedure will not apply during the probationary period, employees still have a right to fair procedures prior to the termination of employment. The Labour Court in Glenpatrick Watercoolers Ltd. –v- A Worker has stated that, even where a Company’s standard disciplinary procedure is stated not to apply during probation, the requirements of the Code of Practice on Grievance and Disciplinary Procedures apply and the employer has an obligation to act fairly during the probationary period.
The case of Beechside Company Ltd t/a Park Hotel Kenmare –v- A Worker in recent months acts as a reminder that failure to follow fair procedures in the course of a probationary period dismissal can expose employers to costly claims and significant adverse publicity. In that case, the claimant alleged that he had been headhunted as General Manager and was dismissed without notice less than three months later. He was called to a meeting without notice and told to leave with immediate effect. Although the employment contract provided that the contract could be terminated on notice during the probationary period, the Labour Court recommended an award of €90,000 to the claimant. It found that the employee had not been provided with any details of performance-related issues, had been given no advance warning that his job was in jeopardy, had no right to representation, was given no reasons for the dismissal and had no opportunity to respond. This case has effectively debunked the common misconception that fair procedures are not required during a probationary period. It appears furthermore that there is a greater onus on employers to implement fair procedures for dismissals with serious reputational consequences (such as that at issue in this case).
While an employer has a right not to retain employees found to be unsuitable during probation, a decision of this nature can only be effectuated where the employer adheres to standard tenets of fair procedures. Accordingly, the employer should communicate with the employee throughout the ongoing probationary period concerning how the employee is performing in line with Company expectations. Specific goals should be set and concerns should be flagged at regular review meetings to allow an employee an opportunity to make the required improvements. Probation should be considered as an on-going process in which issues are dealt with as they arise rather than taking an unsuspecting employee by surprise at the final probation meeting. Where issues have been identified, the employer should be very clear about the expected standards, should offer support (such as training) and should indicate that failure to improve may result in termination of employment. The employee should be given a reasonable amount of time to improve and address any employer concerns before steps are taken to dismiss him/her.
The importance of having followed a documented process was observed in Merloni Limited –v- a Worker in which, unlike the Park Hotel Kenmare case, the termination of employment following probation was upheld because the employer had outlined its concerns in relation to performance and had afforded the employee an opportunity to address them.
For the most part, the Unfair Dismissals Acts 1977 to 2015 require an employee to possess 12 months' continuous service in order to pursue a claim for unfair dismissal. However, employees with less than 12 months’ service may take a claim for unfair dismissal in a number of instances, including where the dismissal was motivated by discriminatory grounds or by the employee having made a protected disclosure.
Furthermore, employees with less than 12 months’ service may have recourse to the Industrial Relations Acts 1946 to 2015. While a recommendation of the Labour Court under this legislation is non-binding, there is a reputational risk where employers refuse to follow such a recommendation. There are also a range of other claims which may be brought by employees who do not have sufficient service to take an unfair dismissals claim, including for example claims under the Safety, Health and Welfare at Work Act 2005 and the Maternity Protection Acts 1994 and 2004.
The WRC in a recent case of Accounts Receivable Manager –v- A Shared Services Centre awarded €20,000 to an employee who was suddenly dismissed after seven months’ service, having made an allegation of bullying against her director. Despite her probationary period having allegedly been extended by her employer, the WRC on the balance of probabilities upheld the employee’s complaint that her dismissal was not related to her probation and instead amounted to penalisation for having raised a complaint of bullying. In the latest case addressing probationary periods, A Hairdresser –v- A Hair Salon (ADJ-00016046), the WRC awarded €6,000 where the dismissal of a pregnant employee during the course of a purported probationary period was found to arise not from the employee’s failure to meet expectations but instead arose “wholly or mainly from her pregnancy”. Again, this decision was influenced by the absence of any performance review and/or disciplinary process for poor performance.
Following the recent adoption by the EU of the Directive on Transparent & Predictable Working Conditions (the "Directive"), probationary periods will soon be subject to further regulation. Amongst other things, the Directive in Article 8 prohibits probationary periods in excess of six months, save on an exceptional basis as justified by the nature of the work or the worker's interests. Probationary periods in fixed-term contracts will also be required to be proportionate to the expected term of the contract. Member states have three years in which to implement the Directive.
Therefore, and contrary to popular opinion, termination during the probationary period is not risk-free and can expose employers to significant awards of compensation and adverse publicity. As well as anticipating the forthcoming restrictions in the Directive, employers should, for the moment, be mindful to adopt fair processes when dismissing employees prior to or upon the expiry of their probation. This does not however oblige an employer to adhere to its more prescriptive disciplinary and other company policies which are stated not to apply during probation.
The Employment, Pensions and Incentives Group at McCann FitzGerald has significant experience in drafting probationary clauses and advising in relation to probationary issues. Your usual contact would be pleased to provide further information.
Also contributed by: David McCauley
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.