I always advise employers to consider a statutory 90-day trial period rather than a probationary period, or outright immediate permanent employment.John Shingleton Partner
A proper employment contract is important to protect both employers and new employees alike. Since 1 April 2011, all employers can employ new staff on a trial period of up to 90 days. This article explains the differences between this 90-day trial period and a probationary period.
90-day trial periods
There are a few myths surrounding the 90-day trial regime. First, the sky did not fall on our collective heads as predicted by the unions and second, it is not a “fire at will” regime as stated by certain politicians. Rather, the regime provides employers with a number of immunities if they strictly follow the law.
There is further evidence that the regime has contributed to the steady decline in unemployment and the Employment Relations Authority and Employment Courts have adopted a very strict interpretation of the legislation.
Trial periods are governed by ss.67A and 67B of the Employment Relations Act 2000 (“the Act”). An employer and employee can agree that the employee will be on a trial period for up to 90 days as long as:
- the employee has not been employed by the employer before,
- the employment agreement includes written provisions stipulating that the employee is subject to a trial period, and that during the trial period the employee can be dismissed and cannot take a personal grievance or legal action against the dismissal.
However, an employer can still be liable if it disadvantages an employee in their employment or fails to act in good faith or give a reason for the dismissal, if an explanation is sought, or discriminates in breach of the Human Rights Act.
The leading case so far is Smith v Stokes Valley Pharmacy Ltd . In that case Chief Judge Colgan said that because the effect of the regime was to deprive employees from access to justice, the provisions had to be strictly interpreted.
He then identified a specific series of steps to be complied with cumulatively and held that failure to comply with any of these steps may disqualify an employer from the trial period immunities.
These steps are:
- written reference to a 90-day trial period
- that during the trial period the employee can be dismissed
- the employee cannot bring a personal grievance or other legal proceedings against the dismissal.
The Employment Relations Authority has since consistently applied the Chief Judge’s decision.
A probationary period should not be confused with a 90-day trial period. A probationary period is a period of employment whereby an employee is subject to a trial of sorts but not under the provisions of ss.67A and 67B of the Act. This means the employer is not immune to a personal grievance of unjustified dismissal.
A probationary period also means the employee is entitled to feedback regarding his or her performance and if the employer breaches any contractual duties to the extent it’s reasonably foreseeable the employee could resign, then the employer could face a constructive dismissal claim.
If an employer is unhappy with the performance of an employee on probation, then the employer cannot terminate the employment without following a fair procedure or justification as defined in the Act.
Although the period of probation is not limited to 90 days, the employer must act fairly, reasonably and in good faith.
Trial periods vs. probationary periods
Sometimes an employee is simply not the right fit. Other times, the employee’s performance is not reflective of what their CV might indicate. Therefore, when asked, I always advise employers to consider a statutory 90-day trial period rather than a probationary period, or outright immediate permanent employment.
When terminating employment pursuant to the 90-day trial provision, the employer must ensure not only they advise the employee in writing that their employment is terminated pursuant to the 90-day trial provisions, but that they give the employee the correct notice period.
Finally, an employer must not forget to ensure they act in good faith when terminating the employment. If an employee asks why they are being dismissed then it is important to tell the employee the true reason. A number of employers tell the employee anyway even if not asked. In my view that is good management practice.