The Labour government’s plan to make unfair dismissal a day one right is a major employment law reform which they intend to introduce through the enactment of the Employment Rights Bill within their first 100 days in government. However, it is unlikely to be enacted this quickly as the government will first consult with ACAS, employment lawyers, trade unions and businesses, and it is likely to be resisted by certain sectors.
We do not yet know how the reform will be implemented in law, including whether employees will be unable to bring an unfair dismissal claim during a probationary period or if failure to complete a probationary period will be a potentially fair reason for dismissal.
The government have stated their intention to ensure employers will be able to operate probationary periods to assess new hires and that these probationary periods must have fair and transparent rules and processes. Currently probationary periods tend to be three to six months (with an option to extend) but there is no law regarding their length. It is likely that a statutory time-limit for probationary periods will be introduced to prevent employers simply implementing lengthy periods. There should also be some allowance for employers to extend probationary periods when necessary. It is unclear whether there will be different rules for fixed-term and permanent contracts.
Regardless of when or how the changes will be legally implemented, it is important for employers to have in place appropriate systems to operate and actively manage probationary periods for their employees. Employers should:
- Ensure employment contracts contain details of the probationary period, including conditions, duration and any option to extend that period This is a current legal requirement under the Employment Rights Act 1996.
- Be clear with employees on the dates when their probationary period begins and ends and when there will be probationary review meetings. These dates should be recorded in HR systems.
- Ensure the probationary review meeting is before the end of the probationary period.
- Provide employees with their job description at the outset so they understand what is expected to pass their probationary period.
- If an employee’s performance is a concern, provide feedback and support at the earliest opportunity and keep a written record. Do not delay on this. If a Performance Improvement Plan or extension of probation is appropriate, ensure this is enacted before the end of the probationary period.
- Include the right to extend an employee’s probationary period is in their contract and ensure that reasons for doing so are communicated clearly to the employee and recorded. Take a consistent approach across the business. Note that probationary periods may need to be extended for reasons other than performance, such as if an employee is off sick or is disabled/undergoing an occupational health assessment and reasonable adjustments need to be considered.
- Communicate the decision of whether to keep the employee in employment before the end of the probationary period. Otherwise, there will be consequences for the notice period that an employee is entitled to be given where employment is to be terminated. This will be essential if unfair dismissal becomes a day one right, in order to avoid liability.
- If terminating employment due to a failed probationary period, an employer should follow some process to avoid discrimination and whistleblowing claims arising out of the probationary period (as they do not require two years’ service). The process could be for example communicating reasons in writing and meeting employees to discuss these reasons. If your disciplinary or capability process is contractual then this will have to be followed.